Imagine planning a big party where everything needs to go just right. You’ve asked friends to help – one is responsible for the food, another for setting up the venue, and someone else for decorations. With so many tasks happening at once, it’s hard to know if everyone is on track. Even a small delay can mess up the whole plan.
This is similar to the challenges businesses face in supply chains. With many vendors and shipments involved, delays or miscommunication can cause problems, leading to higher costs and unhappy customers. These hurdles not only slow down operations but also affect profits and customer satisfaction.
That’s where AI comes in, providing real-time insights to keep everything running smoothly. This game-changing technology transforms how supply chains operate. Artificial intelligence offers solutions to the most pressing challenges, from optimizing logistics to predicting demand patterns.
You might wonder, “Ok, how can I get to know what I need to do to succeed from AI in supply chain and how my business can grow from using artificial intelligence.”
Luckily, you’ve come to the right place. Forbytes is an expert in AI. So, we’d like to share the key challenges faced in logistics management and explain how supply chain AI can help solve them. Hopefully, they will guide you in the right direction.
How Artificial Intelligence in Supply Chain Works
According to the latest report, the AI in supply chain market was valued at $4,5 billion in 2023, but it is projected to exceed $157billon by 2030, with an annual growth of 42,7% during the forecast period. Sounds promising, right?
The main reason why AI in supply chain market is growing is the need for manufacturers to simplify complicated processes and ensure the timely shipping of goods, especially when dealing with multiple partners.
AI copes with that by finding patterns that traditional systems can’t do keeping the supply chain balanced. As a result, businesses gain valuable insights that optimize logistics, from warehouses to shipping and distribution centers.
Here is a breakdown of how AI drives supply chain management by transforming raw data into fully automated smart manufacturing.
Modern supply chains are vast and require close monitoring to avoid disruptions. Supply chain AI can assist with forecasting, such as predicting demand or warehouse capacity based on customer needs. Artificial intelligence can improve forecast accuracy by 75%.
AI can also track inventory and market trends. In inventory management, it improves visibility, automates documentation, and updates data when items are moved. AI enhances transparency, offering valuable data to all stakeholders in the supply chain. This leads to significant time and cost savings while helping companies meet ethical standards more efficiently.
According to Worldmetrics, 61$ of companies using AI in supply chain have seen a reduction in operational costs. So, you can see that AI is already transforming supply chain management by encouraging companies to fuel their businesses with this technology and deliver more advanced and sophisticated software.
How to Apply AI in Supply Chain for Your Business
The use of AI in supply chain and logistics can improve almost all operations and processes. It can enhance safety, reduce costs, and streamline operational efficiency. How exactly? Let’s have a closer look at key applications of AI in supply chain.
Demand forecasting for adapting to market conditions
Whether you’re an experienced company or a startup, you need to forecast supply chain trends, product demand, as well as market situation. Supply chain AI analyzes past sales, consumer behavior, and external factors to predict future demand. This helps companies adjust production, manage inventory better, and respond to market changes, reducing waste and stockouts.
According to a recent report, artificial intelligence can improve forecast accuracy by 75%. Reasonably, many companies are adopting this technology. For example, Walmart uses generative AI to forecast product demand and optimize stock levels.
Inventory management for optimizing stock levels
Generative AI improves distribution and storage by analyzing delivery times, transport costs, and demand. It continuously reviews sales data and demand and adjusts inventory levels in real-time to meet market needs. AI in supply chain also sets optimal safety stock levels, considering factors like seasonal trends and demand shifts.
By recommending reordering points and safety stock levels, AI helps boost efficiency and reduce costs. With AI, you can expect less surplus inventory, fewer shortages, and the prevention of stockouts. According to a recent report, automated inventory management systems can reduce stockouts by up to 80%.
Businesses use AI in supply chain based on their specific needs. For example, Amazon uses generative AI in its fulfillment centers to optimize product placement, streamline order processing, and reduce storage costs.
Procurement and supplier management for reaching the best suppliers
Generative AI strengthens supply chains by analyzing data to find the best suppliers based on performance, quality, and cost. It also reviews past interactions and contracts to identify risks and opportunities. As a result, companies can manage suppliers more effectively and build strong partnerships.
Gartner reports that in the past 24 months, supplier collaboration has become a top priority for 88% of procurement leaders. That’s why companies are adopting AI in supply chain to ensure strong partnerships and reduce costs. For example, ASOS uses AI to analyze returns and develop strategies to reduce return rates.
Logistics and distribution for on-time delivery
Generative AI improves transportation by analyzing traffic, weather, vehicle capacity, and customer demand. As a result, this optimizes delivery routes. Logistics companies can use AI in supply chain to manage fleets by gathering data from GPS, traffic updates, and weather forecasts.
AI also provides real-time monitoring and reroutes deliveries to avoid delays from traffic or accidents, improving on-time delivery. For reverse logistics, AI analyzes data on product returns, repairs, and recycling, helping optimize the process for returned items. For example, Best Buy uses AI to handle reverse logistics efficiently and get reports on product returns, repairs, and recycling processes.
Ready to transform your supply chain with AI? Contact our team today to get started with a tailored solution for your business!
Challenges of Using Artificial Intelligence in Supply Chain Management
AI in supply chain boosts the efficiency of your logistics operations, yet implementing and optimizing these processes present significant challenges. By understanding these challenges and applying targeted solutions, you can refine your approach toward the integration of AI in the supply chain. So, here are issues that can hinder your business success:
- Unpredictable consumer demand: It’s difficult to plan inventory. Therefore, it can lead to excess stock or shortages.
- Limited transparency: Tracking and managing inventory is not an easy task that causes even more disruptions in operations.
- Rising operational costs: Higher costs in logistics, labor, and materials pressure companies to optimize them.
- Complex supplier management: Handling multiple suppliers across regions is tough, affecting quality and timely deliveries.
- Risk management: Supply chains are vulnerable to risks like geopolitical issues and natural disasters, leading to delays and losses.
- High customer expectations: Modern consumers demand fast and reliable service, requiring supply chains to be agile.
- Manual data analysis: Traditional analysis is slow, error-prone, and inefficient.
Need help overcoming supply chain challenges with AI? Contact us today to get tailored solutions for your business!
5 Steps to Prepare Your Supply Chain for AI Implementation
Fueling a supply chain with AI offers many benefits. But you need to establish clear steps to ensure a smooth AI implementation. So, here are our recommendations on how to prepare your supply chain for AI implementation:
Step 1. Assess your current logistics network
First, evaluate what’s working and where issues arise in your current logistics network. Identify bottlenecks to ensure AI supply chain will benefit your business. For this, you should focus on pain points across the supply chain and organize datasets for AI use.
Step 2: Create a roadmap
Once you’ve assessed your supply chain, start creating a roadmap to prioritize the most critical supply chain issues.
Step 3: Pick a relevant AI system
Select an AI system that fits your business needs. You may need expert guidance to find the best fit. For this, you should review system options that align with your goals. Seek expert advice if necessary to simplify this task.
Step 4: Implement the AI solution
Another step is to AI supply chain solution. Work with your internal IT team and the AI vendor to get the system running. At this stage, you should train your team on AI technology to ensure its successful implementation. For this, you should communicate your plan to the team and allow them more time for training.
Step 5: Monitor and adjust
AI systems evolve, so continuous monitoring and testing are essential to improve performance. For this, you should regularly test and track AI performance and have a system in place to record test results.
Forbytes’ Expertise in Integrating AI into Supply Chain Solutions
All in all, using AI in supply chain solutions isn’t just a nice-to-have; it’s a must for companies that want to stay ahead. With AI, businesses can get better insights, cut down on costs, and meet customer demands while being more sustainable.
At Forbytes, we’re experts at AI implementation to make your operations smoother and boost overall efficiency. When you partner with our team, you get custom AI solutions that tackle your specific supply chain challenges and deliver real results. Whether you want to improve inventory management, work better with suppliers, or streamline logistics, we’re here to help you through the whole process.
Contact us today to find out how we can help you make your supply chain smarter and more efficient!
