Supply chain AI is a key to success – so why do so few companies use it?

Companies that can plan ahead hold a key to success. But what in many cases feels like looking into a crystal ball becomes reliable through the use of artificial intelligence (AI). "If you want customers to be able to stand in front of full shelves, AI forecasts are extremely helpful. That's why some retailers are already using AI-powered sales forecasting. But there is still plenty of room for improvement," explains Thomas Kempcke, logistics expert and author of the study "AI in the Supply Chain", which was conducted by the EHI Retails Institute on behalf of Relex Solution. It is clear from this that AI could be used in many more areas to secure the supply chain than it is currently used for: "Weather forecasts, for example, are not yet even taken into account in branch deliveries," says Kempcke.

But what economic impacts do the retail companies surveyed expect from the introduction of AI? Two areas in particular stand out. 80 per cent expect positive impact on the availability of goods. 76 per cent expect major impacts on inventory optimisation. Another 52 per cent expect higher delivery reliability, and almost 42 per cent expect it to be easier to achieve target figures. In contrast, those responsible for retail decisions expect only minor impact on the efficiency of branch processes, the reduction of lead times and the reduction of handling costs.

Overall, 76 percent of companies rate AI as (relatively) important for success in supply chain management. However, only a few have put it into practice. The most common application is the creation of sales forecasts. 16.7 percent of the study participants have successfully implemented AI in this area. For another 16.7 per cent, this application of AI is in the pilot or introductory stage. To a much lesser extent, companies used AI in the areas of campaign forecasting (9.1 per cent), inventory management (8.0 per cent) and for goods flow smoothing (8.0 per cent). All other application possibilities remain below the 5 percent threshold. For example, markdown optimisations or weather forecasts for branch deliveries are not used at all.

Concern about costs and lack of qualifications

But why is it that survey respondents in responsible roles can see the great importance of AI for their company, but are so hesitant about implementing it? Two areas prove to be a stumbling block from the company's point of view: finance and staff. 76 per cent of staff in responsible roles shy away from the investment costs. 86 per cent also believe they do not have enough suitably qualified staff. And 68 percent fear that approval for the use of AI in their company will not be high enough.

Artificial intelligence is already revolutionising supply chain management – and a large proportion of companies are fully aware of this. Those who do not rely on AI are missing out on one of the keys to success. However, its practical implementation is a stumbling block. So far, only a few companies are using AI, and that is only in a few limited areas. Besides the investment costs, which many shy away from, there is also the concern of not finding enough qualified staff. But in the meantime there are initiatives, for example supported by the Federal Ministry of Economics, that help companies implement AI and qualify their staff. It has since also become apparent that companies that get outside support can often implement AI better and more sustainably than companies who go without help. More expert tips can also be found in the study by the Herchenbach Supply Chain Institute on the "The imperative for a new normal in supply chain design".