The technology can suggest possible courses of action to deal with the disruption and can also examine the consequences of a broad spectrum of risks that supply chain managers might not ordinarily consider. And it can do all of this in minutes, if not seconds.
Risk management made easy: Indeed, risk management is among the most powerful of GenAI’s capabilities. The technology can be used to analyse historic data and overlay it with data on past and current market conditions, weather patterns and geopolitical events, among other sources, to pinpoint potential supply chain risks now and into the future.
Beyond mere risk identification, it can also be prompted to produce scenario simulations and response strategies to help planners to proactively manage and mitigate the risks.
Automation of vendor negotiation and processes: At an operational level, GenAI can be used to automate the tender process and purchasing terms and conditions with suppliers. This brings structure and consistency to often complex processes while also taking the emotion out of face-to-face engagements. The technology can be directed to seek the best value result taking all variables into account and producing better outcomes in many cases. In fact, when a US retailer used a bot to negotiate terms, 65% of the suppliers involved said they preferred interacting with it to negotiating with an employee.
GenAI can also review contracts with the existing supply base by automatically extracting key information from the contracts and generating summaries or insights. It can review and compare contract terms, identify anomalies, and come up with recommendations for future renewals and contract negotiations.
At a global level, it can analyse a vast number of variables, including differing tariffs, customs regulations, trade agreements, container availability and shipping costs, to propose the most efficient and cost-effective trade routes and strategies.
GenAI can ease logistics pain
Closer to home, logistics network design is another area of opportunity. GenAI can optimise networks by taking into consideration multiple factors such as warehouse locations, transport links and demand patterns to generate the most efficient configuration. This leads to faster delivery times, lower costs, and improved service levels.
Taking it one step further, the technology can be used for dynamic last mile route optimisation. GenAI can continually update, and revise delivery or pickup routes and schedules based on changing factors such as traffic conditions, weather, and the order of priority of deliveries. This can deliver increased efficiency, fuel savings and improved customer satisfaction.
Need to take a measured approach
Organisations, however, need to be aware of the limitations and risks associated with the use of GenAI in supply chains. GenAI tools are only as good as their input data and rushed implementations can result in poor and indeed damaging results. The quality and availability of data from supply chain partners is also of critical importance and organisations must take all possible steps to ensure it meets the required standard. It is, therefore, better to take a measured and considered approach to the implementation of GenAI tools in the supply chain rather than rush into something out of fear of being left behind by competitors.
Summary
GenAI has opened up new possibilities for supply chain optimisation. Organisations can use it to reduce costs, increase efficiencies, and drive out complexity in existing arrangements at the same time as building the resilient supply chains of tomorrow. Continuing developments in the technology are making it more accessible financially and easier to use. In these circumstances, every organisation should have a strategy for GenAI use in its supply chain.
