The evolving role of tech and AI in sustainable supply chain management
The pandemic spurred great volatility in the ecommerce market for retailers, manufacturers, and suppliers. At Priory Direct, managing fluctuations in the sustainable packaging market has always been extremely challenging, particularly with our customer base of 21,000 businesses, primarily retailers. You either risk running out of stock and losing customers, or you pay large sums to store excess stock. As such, we are always exploring ways to harness technology and AI to better anticipate customer needs and improve how we manage our stock. Greater efficiency also leads to better environmental outcomes, by minimizing excess stock and half-empty lorry journeys.
As part of this, we have two technology projects underway in collaboration with the University of Kent, and backed by Innovate UK, which are teaching us about the immense potential impact of technology and AI on the future of the ecommerce industry.
Utilizing AI
The first project is through a Knowledge Transfer Partnership (KTP) scheme, sponsoring a PhD graduate for 30 months supported by university expertise around machine learning (ML), logistics and predictive modelling and demand forecasting. The graduate is using our data and AI to develop an innovative forecasting model to predict clients’ needs and enable more efficient planning, manufacture, and movement of packaging stock. The model will enable us to operate in a drastically more sustainable and efficient way, propelling growth, and will be transferrable to other sectors.
We identified the opportunity to transform how we operate through AI several years ago but lacked the resources and budget inhouse to make the innovation a reality. Now we hope that other businesses will learn from our project.
Improving the approach to assessments
There is a growing global urgency for retailers to work towards net zero, both for the greater good and the bottom line, as consumers increasingly take environmental credentials into consideration in their buying choices. What is missing is the data and transparency in supply chains to enable businesses to tangibly reduce their impact beyond the real or virtual shop floor.
In other words, there isn’t enough information available for businesses to improve. In response to this, our second project involves developing a cradle-to-grave Life Cycle Impact Assessment approach that is much broader than traditional assessments. It will enable businesses to fully understand the CO2 footprint and environmental impact of packaging choices and supply chain configurations, allowing them to make science-based decisions to reduce packaging emissions and wasted materials.
The model is widening the lens beyond the simplistic parameters of most Life Cycle Assessments, which only look at greenhouse gas emissions. There are many other factors to consider, and sometimes higher emissions can in fact be better for the environment overall, when considered as part of the wider picture.
Our model incorporates microplastic generation, acidification, eutrophication and many other parameters, to empower retailers to have packaging data at their fingertips that is compliant with Extended Producer Responsibility requirements and to an ISO approved standard. The project is initially aimed at fashion retailers, but we hope to create a tool that can be adopted by other businesses in the wider market.
Inventory management
Inventory management is another area which can be revolutionized through technology: particularly via automation, which has become essential. The rapid growth of ecommerce has led to an increasing amount of data available in inventory management, and supply chains are becoming more interconnected and complex. Consumption rates and supply are also far more volatile, with millions of customers able to purchase products on large scale ecommerce websites at a single point in time.
As such, manual inventory management is no longer effective, or even realistically possible – there is simply too much data. But automation allows retailers to gather and analyze large volumes of data, and make informed decisions to better manage their stock, whether that’s by responding to market fluctuations or adapting to customer needs.
Generative AI (GenAI) and ML tools are likely to have a significant impact in this space. There are an increasing number of points at which data can be collected, but AI and ML can process this data into something useful to decision makers. Developments in this tech allow for more accurate forecasting, leading to better informed business decisions.
GenAI also enables leaders to identify trends and correlations when managing stock. For example, if certain weather conditions led to increased sales of a particular product. This allows warehouses to better manage their stock or prepare for large swathes of purchases.
Digital twinning is another technology with the potential to revolutionize supply chain management, allowing businesses to digitally replicate entire systems and run experiments to identify sustainability and efficiency improvements without needing to make physical changes. This coupled with AI powered forecasting, can help us to better predict and absorb volatility as well as run supply chains in an overall more efficient manner.
Industries reliant on supply chains will always involve some degree of unpredictability but an increasing number of technological innovations are reducing the impact of this volatility – allowing businesses to work more efficiently and sustainably…watch this space!
For a list of the sources used in this article, please contact the editor.
By Josh Pitman
Josh Pitman is MD of sustainable packaging firm Priory Direct, which supplies sustainable packaging to over 21,000 businesses. It helps large retailers reduce their carbon footprint by tackling supply chain and operational challenges, helping to lower the environmental impact of ecommerce. It also provides affordable, sustainable packaging materials to thousands of small businesses, with 2,000 products ranging from cardboard boxes to mailing bags.