Role of AI in Supply Chain Management 

Supply chain management comprises various activities and processes like sourcing, production, and delivery. The other processes are different in various industries. On the other hand, artificial intelligence (AI) is an online simulation of human intelligence. AI analyzes a plethora of information and accurately predicts the result and pattern. Today, we’ll discuss the role of AI in supply chain management; the uses of AI in SCM; its advantages and disadvantages.

Role of AI in Supply Chain Management – Examples 

Let’s discuss the role of AI in supply chain management and; the uses of AI in SCM; some of the main examples are as follows;

Customer Service

Chatbot is not the latest technology, but artificial intelligence (AI) has automated its responses and amplified its performance. Often, customers contact the company’s representative in the chatbot with similar types of problems and they want solutions. AI has a plethora of information and data available at its disposal, and it collects the right data to answer their query. It saves a lot of CSR teams from answering the same repetitively.

Warehouse Automation

Warehouses like Amazon Fulfillment Centers employ artificial intelligence to automate their daily routine functions and operations. It deals with the company’s employees and autonomous robots to find, store, and pick up orders at the warehousing facility. The AI would tell you the location of employees and robots and allow you to plan their activities accordingly. It helps employees to spend limited time moving within the warehouse; and more time in delivering products where they should be.

Optimized Transport

Many customers want quick and on-time delivery and shipment; AI-based GPS technology has made it possible. It develops the most efficient route for shipment in real time based on the current mapping information. The AI has the capability to do it in a few seconds and minutes, whereas it would take hours for humans to figure out the same route and plan.

Logistically speaking, AI would also help you to optimize the usage of shipping containers. Many people consider cargo containers as big empty boxes; the logistical personnel see them as the economy of space. They could safely load containers to amplify the utility of the space.

Demand Forecasting

Perhaps you would have experienced and seen the targeted ads about whatever you have searched recently. The reality is that you can easily predict the human behavior. AI and ML (machine learning) would employ the information and data to forecast customer shopping patterns. However, it means predicting the needs and shortages of the company in terms of what, when, and where. When they have such information, it would decrease the inventory losses and avoid stockouts.

Inventory Management

Inventory management is one of the critical areas of supply chain management. AI-based stores and companies could easily track their stock and inventory. However, it comprises tracking orders and shipments as they flow and move across the world; while also tracking the stored inventory at the same time. It allows you to manage inventory by analyzing the following variables;

  • Downtimes
  • Errors
  • Temperature
  • Lead times
  • Volume

Advantages of the Role of AI in SCM

Some of the main benefits and advantages of the role of AI in supply chain management; and uses of AI in SCM are as follows;

Satisfied Customers

Many customers want speedy and quick delivery, especially B2B clients and individual customers. The AI chatbots answer their queries on time and deliver their products quickly and easily. Ultimately, it amplifies their customer satisfaction level.

Transparency

When you are dealing with global suppliers, then things could easily go wrong. You would face delays in delivery or misplacement due to the wrong shipping label on the wrong container. AI technology allows you to avoid the problem by collecting a mass volume of data and offering you little understandable information for humans.

Cost Saving

AI helps supply chain and logistical companies to perform their operations efficiently. It analyzes the repetitive tasks of transportation and inventory and offers you the most efficient method of doing it. It would days for humans to perform such tasks, and AI could do them in minutes.

Disadvantages of the Role of AI in SCM

Some of the main challenges and disadvantages of the uses of AI in supply chain management are as follows;

High Implementation Cost

AI offers you great tools, but they are highly expensive. It is important to keep in mind that the AI implementation cost for your business would require a significant amount of capital resources. It would range from 10000 USD to 100000 USD depending on your business types.

Unemployment

According to an estimate, approximately 800 million jobs will go away due to the application of AI at the end of the decade. It would increase companies’ revenue and profitability but also cause frustration among the masses.

Data Security Issues

In order to make the right decision, AI would require a mass volume of data for conducting analysis. It is important to beware of the source of the data and whether you have permission to access it or not. Many governments don’t allow companies to use the personal data of users and customers for commercial purposes.

Conclusion: Role of AI in Supply Chain Management 

After an in-depth study of the role of AI in supply chain management; we have realized AI is highly beneficial for the growth of businesses. If you are learning about the role and uses of AI in SCM; then you should keep in mind the abovementioned elements, advantages, and disadvantages.

References 

  1. https://appinventiv.com/blog/ai-in-supply-chain-analytics/
  2. https://www.simplilearn.com/role-of-artificial-intelligence-engineers-in-supply-chain-management-article
  3. https://www.computer.org/publications/tech-news/trends/ai-revolutionizing-supply-chain
  4. https://quantic.edu/blog/2023/04/10/the-important-role-of-ai-in-supply-chain-management-logistics/
  5. https://throughput.world/blog/ai-in-supply-chain-and-logistics/
  6. https://www.linkedin.com/pulse/role-ai-supply-chain-management-iyyappan-s-cii-scmpro
  7. https://www.forbes.com/sites/forbestechcouncil/2023/08/08/ais-role-in-supply-chain-management-and-how-organizations-can-get-started/?sh=280a8df645dd
  8. https://www.leewayhertz.com/ai-in-logistics-and-supply-chain/