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Supply Chain Transformation through Artificial Intelligence

December 17, 2021 | Divya Khare

Blog / Supply Chain Transformation through Artificial Intelligence

Transforming Supply Chains with AI

Artificial intelligence (AI) cuts across different life aspects, particularly robotics and making data-informed decisions. The linkages between supply chain and AI are not far-fetched –. Today’s supply chain differs a lot from what it used to be many decades ago. Globalization is a major difference changing the supply chain outlook, including technology advancement. complexity in the supply chain calls for the adoption of systems that match the difficulty. That is what artificial intelligence brings.

Research has shown that machine automation involvement in supply chain methodology will be three times in five years. This assertion was based on the survey that revealed that supply chain organizations are spending to improve their organizational efficiency. Then this makes us ask how can artificial intelligence transform the supply chain industry?

This blog provides insight into what integrating AI with supply chains brings for organizations.

What does Supply Chain Transformation Imply?

You must first know that the transformation happening to supply chains is not magic. Instead, it’s a gradual process that will eventually lead to productivity maximization in the long run.  

Transforming the supply chain process implies managing and organizing your business goals. It must align with the supply chain to guarantee operational efficiency. Practically, it is a strategic approach employed by organizations to ensure they meet changing requirements of their business from time to time.

It shows that organizational needs go beyond material flows. It includes some responsibilities requiring a systematic approach.  So how can you transform your supply chain? It involves understanding a few things such as:

  • Define your strategic business goals – The first step to transforming your supply chain is clarifying what your business wants to achieve. It involves having a clear and concise growth plan irrespective of your niche or industry.
  • Build your supply chain goal based on business objectives – With your strategic business goals in place, you can use them to shape your supply chain needs. Understanding your business goals gives you a competitive advantage to strategically position it through supply chains.
  • Create well-structured Planning processes – Now that you have crafted out a perfect supply chain goal, the next thing is to develop and implement a befitting solution. You can achieve this with a well-defined planning process. It offers many transformation benefits.

How is Artificial Intelligence improving Inventory Management?

When talking about supply chains, inventory management is a core component that cannot be overlooked. It is so because other aspects of supply chains fall back on the inventory, making it an indispensable part. Managing your raw materials, semi-finished goods, and the products ready for sales is imperative. 

Inventory as a part of supply chains is becoming more complex than manual processes can handle. The involvement of big data is a major constraint, which might affect productivity without incorporating artificial intelligence. Minimizing cost and increasing accuracy to attend to customers’ needs start with tracking quantity issues.

Artificial intelligence comes in handy to identify the pressing needs of businesses. It is now possible to manage multiple inventories, keeping track of quantity available and supplies.  Gaining visibility regarding the supply and demand ensures effective production of what your customers require. The possibility arose from reading the inventory database and using data for forecast and planning.

Infusing artificial intelligence into inventory also aids time estimation for raw materials and available-to-promise inventory. It gives you a clear picture of what you need to do and how to satisfy your customers. All these together bring about safety stock management. With the ever-changing customer demand and expectations, you can stay ahead irrespective of the fluctuation in the market.

It does not only increase productivity, but it also gives your business credibility and enhances your Return on Investment (ROI). The automated re-balancing takes care of shortage or over-purchasing of inventory at all times.

Supply Chain Management and Performance

Managing supply chains is about satisfying your customers. That is why the competition is high among companies offering the same products or services. Adding suppliers to your organization’s strategy is key to meeting customer expectations and moving many steps ahead of competitors.

Supply chain management focuses on integrated strategy in the production flow process. It is essential to ensure a smooth flow in the activities involved by eliminating every possible obstacle. It implies that an information mechanism is necessary for transparency. 

Supply chain management implementation helps to reduce operating costs involved in the activities. Doing this increases efficiency with an assurance of high product quality, which maintains the value offered to customers. Product availability and service speed are indicators of a well-performing supply chain management.

Achieving this requires integrating artificial intelligence with supply chain management. According to research conducted by IBM, it was revealed that AI is inevitable for organizations to perform at the highest level. They view AI as central to realizing success in their supply chain activities.

How Artificial Intelligence Contributes to Supply Chain Transformation?

With the supply chain software performing its function, artificial intelligence can increase its effectiveness. Your company can boast of cost reduction, risk avoidance, and operational efficiency by incorporating both. Optimizing inventory and managing warehouses through available data can generate these results.

However, the result materializes when an organization embeds artificial intelligence tools with its supply change management. Among the transformations offered by AI are elasticity and responsiveness. AI allows your supply chain to make decisions based on real-time data rather than analyzing past patterns.

Your supply chains begin to adopt dynamic should-cost models after eliminating an inefficient cost management method. Artificial intelligence increases end-to-end visibility into inventory demand and supply. As such, organizations can record a significant reduction in wasting resources.

In summary, artificial intelligence will transform supply chain management through;

  • Increased forecasting accuracy and sensing of demand
  • Dynamic Should-cost models reduce cost significantly.
  • Real-time inventory and warehouse management.


Supply chain management without artificial intelligence will produce unsatisfactory results when the process becomes complex. However, incorporating these tools will eliminate redundancy and increase visibility. You can be confident of managing market fluctuation effectively without running into shortages or unnecessary stock purchases.

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