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How AI Impacts and Improves Supply Chain Management and Efficiency


How AI Impacts and Improves Supply Chain Management and Efficiency

AI has been revolutionizing everyday business activities, and it has proven successful in sparking intrigue. Apart from rapid implementation, it has become a topic of the mainstream conversation. Artificial Intelligence is a machine-displayed intelligence in which learning and action-based skills imitate rationality rather than system intelligence. According to Oxford, 47% of jobs could be automated by 2033.

AI is split into two categories – augmented AI and automated AI:

  • Augmented AI helps individuals carry out routine tasks with a human touch.
  • Automated AI functions autonomously without human interference.


Understanding these two types of AI capability is essential to understanding the potential applications of AI in business software. Implementing AI in relevant supply chain tasks can strikingly improve business value. Twelve percent of supply chain professionals confess they use AI in their supply chain management efforts.

Deloitte’s supply chain specialist, Thomas D. Boykin, said, “I consider AI as a system where humans are not included in the supply chain loop. Apart from implementing prescriptive and predictive analysis, AI focuses on execution without human interference.” The influence of AI on logistics is pretty robust, but we can quickly recognize the most significant aspects, so they have the greatest influence on the entire business.


The Relationship Between AI and the Supply Chain

You’ve seen the effects and transformational capacity of AI in general. Now, it’s time to emphasize the relation between AI and supply chain management.

AI allows data extraction from suppliers

The NLP creates data sets for suppliers and decodes unexplored details. NLP can search through supply chain agreements, purchasing orders, buyer or supplier log files, and other data to detect common themes or problems. This feedback will refine SCM as part of performance enhancement.

AI improves inventory management

Data science is another dimension of AI that can analyze structured data to assess trends and possible improvements and then make judgments based on results. The device will test and translate information in real-time to provide accurate guidance in a timely manner.

AI helps foresee future trends

AI, when integrated into supply chain management, can foresee future industry trends and keep up with industry standards according to clients’ needs. AI learns this through analysis and interpretation of communication methods such as chatbots, messages, comments, and inputs. This data is then used to develop products and plan according to demand.

AI optimizes logistics and warehouse management

The success of AI-based supply chain management is hidden in the logistics. AI analyzes data for smart-planning, thus resulting in warehouse improvement.

Forbes says, “A forecasting engine with machine learning, just keeps looking to see which combinations of algorithms and data streams have the most predictive power for the different forecasting hierarchies.” AI, Supply Chain Management, warehouse management

Autonomous robotic vehicles increase efficiency

AI-powered vehicles are in demand as magnanimous supply chain operators invest in them. Autonomous vehicles make use of easier routes for shipping, transportation, and various important functions. This helps cut labor costs and gives a head start to supply chain businesses, which makes them ahead in the competition. Techcrunch says, “Where drivers are restricted by law from driving more than 11 hours per day without taking an 8-hour break, a driverless truck can drive nearly 24 hours per day. That means the technology would effectively double the output of the U.S. transportation network at 25 percent of the cost.” 

Chatbot technology elevates customer experience

Businesses that rely on chatbot technology witness a surge in building trust through online platforms. Chatbots allow quick availability, save customer interaction costs, and speed up response time. Chatbot technology is known to be more efficient than humans. This is not the only advantage of using chatbots; the system is also used to simplify procurement because customers can interact with chatbots to place orders and get their demands fulfilled.

Other benefits of AI integrated supply chain management include:

  • Value creation based on data interpretation to leverage business intelligence
  • Enhanced speed for efficient supply and demand based on recent trends
  • Improved warehouse operations to optimize logistics and create a better supply chain process
  • Cost reduction for efficient production and delivery due to reduced storage and manufacturing costs


Supply Chain Management Challenges

AI, Supply Chain Management, Artificial Intelligence technology, challengeThere are underlying challenges associated with technology whenever we talk of benefits. McKinsey & Company believe that the adoption of AI will deliver higher global economic activity and higher GDP. Isn’t it easy to get carried away with this without looking into some major issues that might surface and affect the efficiency of AI in a supply chain?

Any AI system works efficiently in the presence of reliable data and information; it is the backbone of Artificial Intelligence technology. It’s important to interconnect AI applications with databases. This is a complex process but necessary for evaluating, cleaning, and analyzing data. AI focuses on algorithms and simulations for analysis and intervention across the supply chain. Supply chain management should carry out periodic checks to ensure that all AI operations run successfully.

However, it’s impossible for AI to exist in isolation and is not an effective replacement for the business development in supply chain management. It’s a wonderful method to perform, grasp data, and motivate decisions, but sole reliance on AI would incur a loss and affect business goals. Some other challenges posed by AI in supply chain management are:

  • Lack of big data
  • Unintelligent AI
  • Short-sighted optimization
  • AI skills gap
  • Overconfident AI vendors


How Can You Join the Supply Chain Management Revolution?

The number of AI-based applications in logistics and supply chains is increasing as technology becomes more available. The only problem faced by the tech-world is the insufficiency of talent and human resources to leverage skills and innovate modern AI. But the divide will lessen with time as 64% of supply chain executives believe that data collection will open new avenues as it becomes the top priority of leading organizations.

The actions you can take to set your feet in the AI revolution include using data processing software based on economic principles, integrating AI in systems such as ERP, and minimizing errors with the help of chatbots. Other applications include:

  • Harnessing the power of AI to optimize travel routes of automated vehicles
  • Gathering information and data from customers with the help of chatbots
  • Optimizing product distribution
  • Analyzing product processing operations


Supply Chain Management is a dynamic industry and poses innumerable challenges for humans to comprehend. Without Artificial Intelligence, the impeccable and prompt operation of logistic processes will be almost unlikely. Supply Chain Management with integrated AI is the dawn of a new technological revolution, and yes, you are a part of it too!



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