Artificial intelligence (AI) has significantly affected the way supply chain and procurement are conducted. At this stage, AI in supply chain is still in its early days, but its potential is remarkable. In short, AI is the modern answer to the challenge of how to effectively manage supply chain management and procurement in the data-rich environment of the 21st century.
One of the most common ways that AI is used in future-forward supply chain and procurement operations is through predictive analytics, which provides autonomous and near-real-time insights that can inform decisions regarding inventory levels and purchase orders. This means that, rather than relying on forecasts that tend to be inaccurate, businesses can benefit from an AI-driven predictive analytics tool that can predict demand accurately, enabling them to manage their inventory and resources better. In addition, predictive analytics can also be used to analyze historical supply chain data. This allows organizations to optimize their processes, identify areas of inefficiency, and find new opportunities for cost savings.
AI is also used in procurement to streamline the process of purchasing raw materials, goods, and services. AI-powered procurement software can match price, quality, and lead times for requested items, ensuring optimal value for each purchase. AI can also provide greater visibility by helping to monitor and ensure compliance with corporate purchasing policies.
Furthermore, AI-based applications are also being used to improve supply chain visibility, connecting different areas of the supply chain into a single, integrated platform. This allows companies to gain an accurate and up-to-date view of their entire supply chain, from raw materials to finished products, and gain insights into trends in customer demand. In addition, AI-driven applications enable managers to identify unexpected disruptions and quickly develop solutions to fix them.
Although AI has great potential in supply chain and procurement, some issues and risks must be considered. For example, using AI in supply chain automation could result in job losses due to its ability to automate specific roles and tasks. Additionally, with the increasing incorporation of AI into formulating decisions, there is the potential for intentional or unintentional biases to be introduced into decision-making, which can lead to suboptimal outcomes.
In conclusion, AI is set to continue to play a critical role in the future of supply chain and procurement. As technology continues to mature, automating more complex tasks and creating deeper insights will be possible. This could include more accurate forecasting, more time-efficient order processing, and more efficient decision-making regarding supply chain and procurement. It can reduce costs while increasing efficiency and accuracy, increasing customer satisfaction. Its capacity to automate various roles and tasks, improve visibility and transparency, and drive insights through predictive analytics makes it a powerful tool. However, like with any technology, it is imperative to be aware of the risks and issues related to its application.
With 17 years of experience recruiting supply chain and procurement professionals, I’m here to help. Want more tips and ideas for hiring the best talent? Shoot me an email at mscanlon@ptrnow.com. I’d be happy to chat anytime!
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