In response to the disruptions of recent years, many organisations are focused on boosting resilience in supply chains. This often involved diversifying operations across multiple countries and suppliers. Supply chains gained protection against external shocks, but often at the price of reduced efficiency.
Generative artificial intelligence (GenAI) can provide a solution to this conundrum by offering a path towards autonomous supply chains. The technology can analyse and interpret vast amounts of data, create new scenarios, generate innovative solutions and remove frictions in real-time.
AI has been used in supply chains for many years, but GenAI brings transformative capabilities. While traditional AI primarily focuses on data-driven insights and automation, GenAI can design new processes, forecast future demands with greater accuracy, and rapidly identify the most cost-efficient routes and carriers in the event of a disruption.
The combination of GenAI and traditional AI is a potential game changer in the quest for autonomous supply chains because of former’s breakthrough capabilities and the ways in which the strengths of the two technologies complement each other. Together, they can deliver the creativity and adaptability required for supply chains that can dynamically adjust to changing market conditions and operate with limited human intervention.
Strategic shift to GenAI
Traditional AI is rules-based, requiring prepared datasets and predefined logic to solve business problems. GenAI, on the other hand, works very well for text-rich environments and unstructured data, creating new content based on the data it has been trained on. For example, organisations using traditional AI for demand forecasting are using GenAI to improve accuracy.
EY global research of 460 supply chain and operations executives has found that three-quarters of them are planning to deploy GenAI in their supply chains and 80% believe it can reinvent supply chains and are making it a high priority. In addition, 69% believe that failing to integrate GenAI into their supply chains will put them at a competitive disadvantage.
Despite these positive intentions, organisations are taking a cautious approach and, in the past 12 months, 62% of respondents have reassessed their GenAI supply chain initiatives and only 7% have gone on to complete deployment. The main reasons cited for this were concerns around the unique risks created by GenAI and the challenges involved in implementing the technology.
Nevertheless, GenAI is giving organisations a faster pathway to the autonomous supply chain. But the integration of GenAI into supply chain management is not just a matter of implementing advanced technology. To really create a more autonomous supply chain, a strategic perspective is required that views the adoption of GenAI as part of a broader digital transformation strategy.
This means involving stakeholders across multiple departments including IT, operations, finance and customer service as well as external partners such as suppliers, distributors and customers. This is a prerequisite for the creation of the seamless flow of information to support a more responsive, resilient and agile supply chain.