Where AI Can Improve the Supply Chain

Artificial intelligence (AI) is seeping into almost every industry imaginable, and for good reason. It can improve efficiency, lower operating costs, and provide better insights into the business. In fact, when introducing AI into their supply chains, 53 percent of executives saw an increase in revenue and 61 percent saw a decrease in operating costs. So how can you replicate this for your own supply chain? In this article, we’ll explain the different places in your supply chain where you can add AI and machine learning (ML) to improve it.

Using AI to improve the supply chain

    Providing accurate inventory management

    AI can improve your inventory management and tracking with accurate readings and IoT integration. Thanks to the insights it pulls from data, artificial intelligence determines how much inventory you should have on hand and, if there’s a discrepancy, can source what you need for the best price. It also optimizes the delivery from factory to warehouse to prioritize the transportation of more volatile products.

    Additionally, artificial intelligence can integrate with internet of things (IoT) devices to measure warehouse conditions and adjust the temperature, lighting, and moisture levels to keep inventory from becoming damaged. This will save you money and prevent you from having to reorder small quantities of products.

    Optimizing delivery logistics

    Customers want their products fast, and AI can help you get items to them quickly. By analyzing customers’ locations in relation to the warehouse, artificial intelligence maps out the best route for your delivery drivers to improve the speed of delivery and reduce fuel usage. The system can also take traffic patterns into consideration and help your drivers avoid frustrating delays.

    Many suppliers also include IoT devices, like RFID tags, in the shipments to track progress and estimate delivery times to give clients more accurate predictions of when their products will arrive. If the shipment is to a business, this also helps the customer ensure that someone will be available to receive it.

    Reducing operating costs with demand forecasting

    With the just-in-time supply chain method, organizations used to buy materials as they needed them. However, this method is expensive, and the COVID-19 pandemic showed us just how precarious it can be. Now, companies want to make better estimates about the stock they’ll need, so they can purchase it all at once. 

    Using historical data and algorithmic models, AI can develop forecasts to determine approximately how much inventory you’ll need to meet predicted demands. With this information, you can make more accurate orders and avoid overstocking or understocking. With overstocking, you may end up having to throw inventory away or find ways to repurpose it, but with understocking, you may have to order more in lower quantities, resulting in higher prices, and you’ll have production delays due to the product shortage.

    Accurate demand forecasting can also help you determine how many people you need working each shift. Many scheduling tools even include AI now to automatically make each shift schedule to ensure you have the right number of people with the right experience to keep the business running smoothly.

    Supply chain management software with AI

    While you can add AI to your supply chain through standalone software, it’s probably easier and cheaper to purchase supply chain management software that already includes artificial intelligence. Here are a few to consider.


    SAP Supply Chain Management provides AI and machine learning (ML) for predictive analytics and real-time monitoring. This platform can help you adjust to and plan for fluctuations in demand to keep your supply chain running smoothly. It also helps you optimize your global transportation to minimize freight costs and improve delivery times.


    Infor Supply Chain Management uses AI to optimize inventory and performance by balancing supply and demand. The platform integrates data from sales, finance, production, trade partners, and customers to provide accurate forecasts. It also models business cycles and where you can expect demand spikes, allowing you to plan your shifts and purchasing accordingly.

    Sage X3

    While considered an ERP system instead of a pure supply chain management solution, Sage X3 contains robust supply chain management features and AI to help you streamline your business operations. The platform offers an optional AI-powered chatbot to help you manage accounting and financial transactions, freeing up some of your time. Additionally, Sage offers great supply chain insights to help you capitalize on valuable opportunities.

    Improving your company’s supply chain with AI and ML

    Supply chains can be difficult to manage, but adding AI and ML can help you improve operations and keep things running smoothly. With AI, you can get better inventory management and delivery logistics while reducing operating costs. When looking for ways to add artificial intelligence to your supply chain, consider purchasing supply chain management software that already includes AI. Many offer free trials to help you determine if they’re right for your business.

    Read next: Retooling Supply Chains After COVID-19