Role of AI in supply chain management

Technological advancements and the emergence of Artificial Intelligence (AI) are changing how inventory management works. From faster decision-making to rapid reduction of cycle times, AI and machine learning are ultimately saving costs and increasing production efficiency across industries. 

Using artificial intelligence in supply chain tackles the problem of increased demand due to an increasing consumer base. Gartner states that most supply chain firms anticipate machine-level automation for their supply processes to rise in the coming five years. 

Furthermore, the IoT platform’s global spending rate is expected to rise from $1.67B to $12.44B by 2024, reaching a huge 40% CAGR in a few years. The profit potential that artificial intelligence in supply chain management offers, makes it beneficial for growth-minded companies to consider. 

In this article, we will delve more into the process of the AI supply chain, its benefits, and how it can combat supply chain problems.

Role of Artificial Intelligence in Supply Chain Management and Logistics

AI in logistics and supply chain management delivers epic optimization abilities needed for quality capacity planning, enhanced productivity, and boosted demand forecasting. Here are some ways AI boosts the supply chain across profitable industries;

#1. Precise Inventory Management

Accurate and precise inventory management ensures the proper flow of commodities in and out of your warehouse. It can subsequently prevent inadequate stocking, unanticipated stock-outs, and overstocking in your business. 

Inventory management routine, however, can be rigorous with the issue of the order process and stock-taking emerging now and then. This is where Artificial intelligence enables the smooth running of your inventory system. 

Its supply chain organization tools can take care of mass data, order and keep track of purchase items, and overall prove highly efficient. These AI supply chain software can interpret and analyse large datasets, generating prompt guidance on predicting demand and supply. 

Some advanced AI systems further ensure that you can anticipate potential consumer demand trends and minimize the price of excess inventory.

#2. Improved Safety

Artificial intelligence automated equipment can enable smart planning and safe operations. These tools can analyse company safety information, and surveillance cameras can alert manufacturers about potential risks in the workplace. 

Furthermore, it can document stocking variables and modify operations with adequate proactive maintenance and feedback loops. Overall, it enables companies to respond quickly and decisively to keep their warehouses safe and cooperative to safety standards.

#3. Efficiency in the Warehouse

Every optimal operating warehouse contributes immensely to the success of a brand’s supply chain and logistics. The use of artificial intelligence in warehouse management is essential for quickly retrieving commodities from warehouses and ensuring their smooth voyage to customers. 

AI software can further solve major warehouse problems more accurately and quickly than humans and ultimately simplify complicated procedures. As time goes on, AI automation can significantly decrease the need for warehouse staffing and ultimately save production costs.

#4. Prompt Delivery

The reduction of human dependence that AI brings about enables operations to be faster, smarter, and safer. It subsequently facilitates prompt delivery to your customers and eliminates warehouse bottlenecks in the supply chain path. 

Overall, you get to produce more efficiently and deliver your finished products to your users, as well as track the delivery process.

#5. Partner-and-Customer-Centric Chatbots

IBM stipulates that most businesses get $265 billion in client service calls costing about $1.3 trillion annually. Some of these calls comprise routine rings that chatbots can cater to. Most customers desire to be ahead of their order processes and use various communication channels to stay updated. 

When answering their queries and questions, chatbots can deliver satisfactory responses and redirect strictly necessary complaints to human call agents. The use of AI in the supply chain will ultimately save time, reduce cost, and improve productivity. Subsequently, the details the chatbots garner can be utilised in identifying problem areas and thus addressing them.

#6 Decreased Operation Costs

A significant benefit of supply chain and AI tools is reducing the costs required to operate smoothly. From automated operators to warehouse safety and customer experience, AI reduces the volume of human oversights. In addition, AI robots proffer accuracy and speed in production, leading to efficiency and decreased costs.

Read More: AI in Healthcare: Transforming Patient Care, Diagnosis, and Treatment

Factors to Consider when Using AI for your Supply Chain Management

Suppy Chain Infographics

Before you invest in advanced AI technologies, you should initially assess your business’s digital readiness in the following steps;

#1. Have Realistic Expectations

As an organization, you should run a self-awareness assessment before you commit to Artificial intelligence and its implementation. Your key stakeholders should deliberate on the risks and benefits of utilising a particular AI system. 

Quantify your long and short-term expectations and measure them against your theoretical cost of implementation. Such costs can be the expenses for technology procurement, and labour expenses for installation, training, and setup. 

Additionally, you can set up KPIs to weigh the impact of incorporating Artificial intelligence in logistics and operations. These KPIs can be associated with the firm traditional high-end goals, and overall your professionals should assimilate how automation and AI will improve production. 

The impact of an AI-based supply chain is cumulative and firms will make sacrifices to acquire future benefits.

#2. Harness your Data

Data drives AI and companies bank on them to maximize their returns. Your business often has lots of data within its operating system that are created, stored, and eventually forgotten. In this case, the challenge is not about generating data but finding, analysing, and consolidating this data. 

Before utilising AI in supply management, you may have to spend adequate effort and time in breaking down the archive of forgotten data. Most often gets intertwined with in-depth embedded company processes and organizational culture. 

Additionally, the issue of non-simultaneous data needs across different departments contributes to data abandonment. Each department has different objectives and perspectives when accessing data, and what one considers important may be irrelevant to the other and ultimately dismissed. 

Increased digital improvements can enable companies to restructure and collaborate better on profitably using data. Once adequate data is gathered successfully, you can implement them into your AI systems and harness their potential functionality.

#3. Inquire on How your Company Utilises Technology

When you have grasped the idea of how AI in the supply chain can boost your overall efficiency, access your company’s technology efficiency. The assessment should cover three aspects like skills, tools, and people. 

Begin by communicating with the HR staff to understand the potential impacts of the technological modification on the personnel. You might subsequently have to employ specialized experts to take up new company roles, hence the need to scout and reach out to them. 

You might also have to train the current workforce and ensure they grasp how their workflows and responsibilities will transition after AI implementation. Analyse your current technology stack and debate its limitations and benefits with particular stakeholders. 

The act of interoperability critically measures your technological readiness, therefore, examine how well the diverse technologies are collaborating. You can perform this by asking certain questions like – What language is used for an application? How effective are the data-generating and collection tools? 

To what extent does the company leverage open-source tech? Are the significant apps closed and hinged on vendor customization and services, or is it interoperable and API-ready? Furthermore, you will also have to analyse the potential location of your new technology stack, be it at a data warehouse, on-site, public, private, or hybrid cloud. Additional questions can be; who will require access to sustain smooth operations and KPI acquisitions? 

Overall, the assessment needs careful planning at the application and personnel level and a critical-picture analysis of the enterprise state.

Some Challenges Facing AI in Supply Chain

To create a successful AI-based supply chain, you should be aware of some challenges you may encounter like;

#1. Scalability Issue

Due to the scalable nature of most cloud-based and AI systems, the initial level of start-up systems required to be more effective might be high. Because AI software is unique, your supply chain management has to consider this attribute with your AI services.

#2. System Complications

AI tools are cloud-based and need expansive bandwidth to operate. Most times, operators need special hardware to examine these AI abilities, and their initial cost might be a large investment for partners.

#3. Training Costs

Like with other technology, the adoption of artificial intelligence and its implementation requires staff training. This subsequently causes companies to invest plenty of money and time in training their personnel to use it properly. 

It can ultimately influence business effectiveness as partners work closely with providers to generate an affordable yet effective training program.


The AI supply chain will continually be a part of business innovation, creating improved productivity for most businesses in the future. Every aspect of the supply process can harness AI to improve operations, automate tasks, track and purchase item orders, and solidify cyber security measures. 

The use of AI in the supply chain can enable modern businesses to grow and develop positive changes and meet increasing consumer demand and preferences.