Using Artificial Intelligence to address Supply Chain Challenges

Artificial intelligence (AI) has the ability to transform the corporate world and can contribute up to $15.7 trillion to the global economy by 2030, according to PwC. Supply chain management is Using Artificial Intelligence to address Supply Chain Challengesamong the industries to benefit the most from AI adoption according to McKinsey global survey. In fact, 76% of the survey respondents at supply chain companies have already reported moderate to significant value from deploying AI.

If used in a proper way, artificial intelligence can enable exceptional agility and precision in supply chains, regardless of the industry. In addition, it can lead to a transformational increase in efficiencies and a decrease in costs wherever repetitive manual tasks can be automated. Supply chain challenges can be addressed using artificial intelligence.

Very often, supply chain problems start small, which makes them easy to miss. For instance, delayed paperwork at one company, a missed inspection at another, plus heavy traffic or bad weather somewhere else can eventually add up to significant service-level agreement (SLA) penalties and dissatisfied customers.


Here are some ways in which artificial intelligence can help overcome these Supply Chain challenges:

Various applications of artificial intelligence exists in the supply chain, including AI-enabled robots like inventory-taking drones or automated-guided vehicles such as driverless warehouse carts. It is certain that AI surpasses human capacity in its ability to handle the immense volume of data generated by a typical supply chain. Here’s how supply chain managers can apply the capabilities of AI to boost efficiency:

  •         Extract Important Data From Customers, Suppliers and Documents

To ensure an effective supply chain, tracking documents and data can help you understand what’s happening across your supply chain. However, the sheer volume of information makes it difficult for supply chain leaders to discern problems before they affect the business.

That is where artificial intelligence (AI) can help. AI has the power to analyze vast amounts and diverse types of data in real time, recognize patterns, identify potential issues, and offer insights to speed-up resolution. Besides this, AI can make technical information easier for business users to access, understand, and use to improve efficiency and better serve customers.

For instance, Natural Language Processing (NLP) is a technology that parses human language and extracts insight via AI. NLP can scan through supply chain contracts, purchase orders, chat logs with customers or suppliers and other documents to identify common themes or issues.

  •         Streamline Supply, Demand and Inventory Management

Machine learning is another aspect of AI, which is becoming more prevalent nowadays. It can analyze complex data to establish current patterns and future trends, then make decisions based on outcomes. The use of machine learning can help to manage the flow of goods throughout the supply chain, ensuring that raw materials and products are in the right place at the right time.

  •         Forecast Demand Before Products are Needed

Many businesses are now using AI to source and process data from many different areas, and forecast future demand based on external factors. This allows effective supply and demand planning, and also helps product development.

  •         Optimize Warehouse Management and Logistics

Warehouses are usually considered as busy and ever-changing environments. Using AI can help to analyze warehouse processes and optimize the sending, receiving, storing, picking and management of individual products. Additionally, it can also analyze fleet performance and ensure the right distribution channels to get goods to retailers and other customers in good time.

  •         Automate Vehicles in Distribution Centers and Other Logistics Operations

Along with optimizing warehouse operations, AI can also power autonomous vehicles within distribution centers. Big organizations are already using robotic vehicles and tools to store and pick items, and they use the most efficient routes thanks to AI. Even trucks are now becoming fully autonomous, reducing reliance on human drivers.


Benefits of using AI

Artificial intelligence delivers several benefits for SCM:

-Data analysis and insight creates actionable business intelligence that drives continual improvement.

-Speed is enhanced throughout the supply chain due to much more efficient supply and demand planning, driven by marketplace factors, consumer needs and other environmental changes.

Logistics is improved due to optimized warehouse operations and distribution.

-Costs are reduced due to savings in reduced inventory and storage costs, goods being processed more quickly and faster distribution.


Getting started with AI

It can seem daunting at first to introduce AI capabilities to supply chain management. Since AI can do so much, it’s hard to decide where to begin. A good way to get started is to identify a discrete supply chain challenge and then commit to a small-scale AI project to address that specific challenge. Gradually, success in one area tends to illuminate other aspects of your supply chain that might benefit from AI. The key is to focus on how the results impact your business. AI is a journey, and like all journeys, the first step is the most important.



Smart technologies like artificial intelligence will continue to become more integrated within every aspect of the supply chain. In fact, the future holds a much more valuable supply chain for those who are willing to evolve, adapt and adopt these technologies. Eventually, this can yield benefits such as reduced fees and penalties, optimized warehousing and shipping, better contract terms, and satisfied customers.

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