How AI Could Help or Hinder Supply Chain Management

Amid supply chain challenges that are impacting global trade, the supply chain management industry is turning more to artificial intelligence (AI) to solve gaps in labor and skills deficiencies. But will AI help or hinder supply chain management more in the long run?

After all, the unpredictability of supply and demand in the wake of the COVID-19 pandemic is one of the primary reasons for supply chain issues. Since AI bases insights on existing data sets, this doesn’t necessarily make these tools more useful facing an unprecedented market.

Even so, AI stands to revolutionize supply chain management through the myriad benefits it offers to business leaders. By leveraging data, AI brings a new understanding of future demand, automation potential, and transportation efficiency. With it, supply chain managers can gain powerful oversight into every aspect of the chain.

These are some of the ways AI ultimately helps—rather than hinders—supply chain management.

Predicting Demand

First, there’s the potential of AI to predict consumer demand for products with some level of efficiency. This of course won’t be a perfect process, since AI has to rely on data models assembled out of recorded information or hypothetical samples. However, modern algorithms are great at making use of networks of connected devices to form intelligent assessments of need.

It starts with the Internet of Things (IoT). This category of smart devices capable of communicating data over the internet is lending supply chains endless amounts of information into their processes. From here, businesses can do everything from boosting customer engagement to forecasting demand, pricing, material needs, and more.

All this is possible through the power of big data and predictive analytics. These systems allow the AI to identify telling patterns in markets or equipment, which in turn enable preventative maintenance and risk avoidance.

Enabling Automation

With the power of modern AI, automation has become more of a reality across supply chains. Despite fears that this automation could disrupt supply chain management by displacing the human workforce, this has not been the case. Instead, automation has meant smoother and more efficient processes so that existing supply chain workers can successfully meet heightened ecommerce demand.

Automation software fueled by AI analytics is driving marketing and manufacturing efforts all across the globe. This is because automation offers workers the opportunity to streamline and scale the most tedious of tasks so that they can focus on the problems that arise day-to-day. Meanwhile, machine learning capabilities are enabling AI to manage demand volatility, supply constraints, production scheduling, and more.

The automation potential that AI brings to supply chains could fundamentally transform the nature of goods transportation. In the future, it could power fully autonomous vehicles capable of saving $168 billion annually while cutting logistics costs for supply chains by 47% by 2030.

But regardless of whether or not driverless vehicles become widely adopted, AI is already increasing transportation efficiency in other ways.

Increasing Transportation Efficiency

Road vehicles have contributed to 80% of the global rise in greenhouse gases in the last 50 years. This represents a huge impediment for supply chains needing to reduce their environmental impact out of concerns for environments, people, and economic viability. Fortunately, AI stands to help any supply chain manager reduce their impact in several ways.

AI has been utilized in supply chain transportation for a long time. From GPS devices that calculate the fastest routes to a destination to the back-office analysis of shipping patterns, smart tools make transportation cheaper and more efficient.

Now, AI in trucking has led to new trends that make supply chains better. For example, fully automated load-to-driver matching has minimized route length and therefore CO2 emissions from longer trips. Additionally, AI on the road keeps drivers safer by reducing the risk of human error.

With the help of smart sensors, monitors, dashboard cameras, and information systems, supply chains are improving transportation efficiency. But all this would not be possible without the underlying power that AI offers businesses: the power of transparency.

Maximizing Supply Chain Transparency

The number one reason AI will be more of a help than a hindrance to supply chain management is that it lends managers an unprecedented level of clarity through the entire process. From the supply of raw materials to delivery routers, AI is uniquely capable of assessing large and complex data sets to optimize efficiency at every turn.

As supply chains attempt to recover from the challenges of a pandemic economy, smart software and devices will be instrumental in developing new sustainable networks while streamlining communication. Through connected systems, nodes along the supply chain can instantly communicate with one another, alerting managers to potential issues, and solving problems before they occur.

Supply chain transparency like this will inevitably help resolve the challenges of the time. For business leaders, regardless of industry, considering the potential of AI in your own supply chain can be a great way to future-proof your venture.

Explore the benefits of AI in supply chain management to learn how it can best help you.