Supply Chain Sees Value in AI, But Slow to Adopt

Supply Chain Sees Value in AI, But Slow to Adopt

May 28, 2024
New survey shows 77% of respondents have not yet integrated AI into their supply chains.

A new report, The State of the Supply Chain," from Inspectorio, found that while respondents understanding how AI can can a positive impact on the supply chain, there barrier to adopting the technology. 

Artificial intelligence drives increased efficiency despite lacking widespread adoption

The survey found that 82% of supply chain professionals indicate technology advancements will have a significant impact on the supply chain over the next five years. Specifically, innovations in AI and machine learning have led to notable advancements in quality assurance, predictive analytics, and operational efficiency, supporting improved decision-making and transparency.

Despite this, 77% of respondents indicated that AI is not yet integrated into their supply chains. The current lack of AI-powered tools was cited by 47% of respondents as the primary barrier, highlighting a significant gap in the market for industry-specific AI solutions. Restrictive IT policies were cited as the second largest barrier to adoption (22%).

Unsurprisingly, the report found that companies utilizing AI tools in their supply chains consistently rate the impact of the technology more highly. AI-embracing retailers and brands position themselves as leaders as they actively shape the future of supply chain management, setting the pace for innovation across the sector.

Technology innovation helps close sustainability gap between retailers and factories

Currently, only 25% of respondents view sustainability as a pivotal area for future innovation, indicating that recent advancements have not yet penetrated the broader industry. Amid a landscape still dominated by traditional practices, the potential for significant disruption exists as sector-specific technologies mature.

As early adopters of sustainability and transparency measures, brands and retailers are spearheading leveraging technology to enhance customer engagement and improve product traceability. Meanwhile, factories and suppliers are prioritizing AI to enhance operational efficiencies.

This disconnect underscores the different strategic priorities between retailers and factories in their innovation efforts. While only 14% of respondents currently see consumer demand for transparency and ethical standards as a significant trend influencing sustainability, AI has the chance to act as a catalyst for a forthcoming shift towards more widespread sustainable practices throughout the supply chain.

Companies are managing supply chain risk and regulatory compliance through supplier diversification and technology advancements

Driven by escalating regulatory compliance, 93% of survey respondents indicated that compliance budgets have remained the same or increased over the past two years. Additionally, 65% of respondents rate recent regulatory changes as significant, affecting both operational and compliance strategies.

With risk management, compliance pressures, and budget constraints rated as the primary challenges facing the industry, many professionals are managing risk through supplier diversification, enabled by technology advancements. Diversifying supplier bases not only addresses compliance pressures and budget constraints, but it also acts as a pivotal strategy for risk mitigation.

The strategic use of technology and diversification is described in the report as essential in navigating the complexities of modern supply chains, allowing businesses to better respond to unpredictable challenges while maintaining high standards of quality and operational scalability.

"As evidenced in the report, conflicting priorities exist between increasing operational efficiency and spearheading sustainability and traceability efforts at various points along the production chain," said Chirag Patel, CEO, Inspectorio, in a statement. "The current lack of AI adoption throughout operations highlights the need for tailored solutions to create an effective roadmap to navigate a dynamic and evolving supply chain."

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