How AI is revolutionizing retail supply chains.
Top-performing supply chain organizations are doubling down on their investments in artificial intelligence and machine learning. A recent Gartner study revealed that the most successful organizations are adopting these technologies at a rate of twice their lower-performing counterparts in key areas such as demand forecasting, supply planning, logistics, distribution, and order management. This embrace of AI is providing these early adopters a key competitive edge in a volatile market.
For years, AI has been anticipated to be a game-changer in retail. Now it is fully arriving in the supply chain sector, creating transformative impacts almost
overnight. This technology is rapidly bringing speed and efficiency to a new level. It is also becoming a critical component of the drive toward sustainability, as tightening global regulations have made it increasingly difficult to maintain compliance and efficiency without sophisticated digital systems. For example, by optimizing routes and inventories, AI helps reduce unnecessary fuel consumption and waste.
The news is already filled with examples of some of retail’s biggest names leveraging AI in their supply chains. Walmart and Amazon are using AI-powered robots in fulfillment centers to manage inventory, process orders, and optimize storage space. They’re also utilizing predictive analytics to forecast demand, ensuring products are available when and where they are needed. Zara is similarly using AI for demand forecasting and inventory management, analyzing sales data, social media trends, and other data sources to predict fashion trends more accurately and adjust accordingly, minimizing overproduction and stockouts.
All this is just the beginning. As AI evolves, it’s poised to take on even more complex roles. Future applications are on track to extend into autonomous decision-making where AI systems will not only predict but also make real-time adjustments to supply chains without human intervention. Advanced AI is likely to manage most end-to-end supply chain processes, from raw material acquisition through to customer delivery. This deeper integration promises to transform traditional supply chain models into dynamic, predictive networks that can more adeptly respond to global challenges and market fluctuations.
Building the data foundation for AI
It’s not surprising, then, that retail businesses have such high hopes for AI. This summer, TradeBeyond conducted a survey of retail executives that found AI is the top technology that supply chain leaders plan to integrate into their operations over the next three years. Despite their eagerness to integrate AI, however, many companies have not yet created the digital infrastructure to realize its complete potential. Brands and retailers are understandably eager to leverage AI in their supply chain operations, but in truth many have not yet created the digital infrastructure to do so. One major obstacle preventing businesses from realizing AI’s potential is the lack of organized, centralized, real-time data. To overcome this, companies need to start creating a central repository of supply chain data at the PO, SKU, and factory levels.
The foundation for optimizing the benefits of AI for any organization lies in the ability to interconnect thousands of proprietary data points from multiple data sets across your enterprise. That requires aggregating all data from early-stage planning through the creation of product specifications, onto sourcing, costing, and logistics, and including detailed information on all suppliers along the supply chain up to the Nth tier. It’s only once businesses have established effective data management that they can begin unlocking AI’s full potential.
Digitalizing with a multi-enterprise platform ensures that data is current, accurate, and accessible, setting the foundation for leveraging AI. These platforms provide real-time supply chain visibility, allowing businesses to monitor their supply chains continuously, identify potential issues before they escalate, and make informed decisions based on accurate, up-to-date information. Establishing this robust digital infrastructure is the key to equipping AI with the data it needs for predictive analytics and automated decision-making.
These platforms are already deploying AI in innovative ways, and their capabilities are continually expanding. AI-powered chain of custody tools can significantly enhance traceability by automating documentary verification and documenting the chain of custody of all materials. This AI proactively assesses compliance risks and ensures that every link in the supply chain meets your company’s standards of sustainability and prepare all chain of custody documents necessary to comply with global ESG regulations. By automatically scanning and vetting all documents against multiple databases of blacklisted entities and identifying gaps or missing documentation before shipping, this AI dramatically simplifies compliance with global ESG laws like the Uyghur Forced Labor Prevention Act.
As retail stands on the brink of a digital revolution powered by AI, the opportunities for transformation are immense. Retailers that can effectively integrate AI into their supply chains will not only achieve greater operational efficiencies but will also gain competitive advantages in agility, customer satisfaction, and sustainability. To fully capitalize on AI’s growing potential, brands and retailers must prioritize the digitalization of their supply chain now or risk missing out on critical advancements and falling behind industry leaders.
For a list of the sources used in this article, please contact the editor.
By Eric Linxwiler
Eric Linxwiler is Senior Vice President of TradeBeyond. Retail’s leading extended supply chain management solutions provider, TradeBeyond helps brands and retailers streamline product development and sourcing all the way through order, production, and delivery. Through innovative sourcing management, extended product lifecycle management (PLM), and production and order management solutions, TradeBeyond empowers more efficient, responsible supply chains for many of the world’s largest retailers. TradeBeyond is also the provider of Pivot88, retail’s most trusted quality, compliance, and traceability plat