Tushar Patel understands the growing challenges enterprises are struggling with as they try to manage their supply chains in an increasingly volatile world and the critical role that advanced technologies can play in easing the situation.
Patel is the chief marketing officer for Cleo, a supply chain technology solutions provider that is helping organizations address the rapidly changing demands in the global supply chain ecosystem. The company in a report in March detailed the myriad obstacles enterprises are facing and how investing in supply chain technologies – including AI- and machine learning-based offerings – can have positive immediate and long-term effects.
The challenges come in all shapes and sizes, according to Patel, from economic issues like rising prices to geopolitical events like Russia’s invasion of Ukraine to emergency situations like severe weather and the onset of COVID-19.
“While economic, geopolitical and industry factors remain core influences in the supply chain, there have been new hurdles in recent years,” Patel told Techstrong.ai. “Unforeseen global events and labor shortages are fresh concerns, adding to existing issues like inflation and supplier problems. Inflation has surged in recent years due to factors like pandemic disruptions. Geopolitical tensions have also intensified, adding new risks like trade wars and export restrictions. These challenges have disrupted entire production and logistics networks, while labor shortages have caused further complications.”
In Cleo’s 2024 Ecosystem Integration Global Market Report – conducted in late 2023 by Dimensional Research – business and supply chain technology executives surveyed said the top five supply chain issues facing their organizations this year included the rising cost of goods and labor, a worsening economy, last-mile delivery problems, competitors and changing regulations.
Manual Processes are Part of the Problem
Where the supply chain is concerned, 32% pointed to both manual processes and poor data quality. Other problems were the lack of real-time visibility (31%), poor integration technology (28%) and poor data flow (24%).
However, organizations are increasingly embracing technologies that improve their ability to deliver on their supply chain commitments, which is giving a boost to revenue and efficiency, and separating them from competitors, according to the report. And the payback often can be seen quickly.
Cleo found that 97% of companies surveyed invested in supply chain technologies last year and 81% said their investments improved the situation in less than two years. About 35% saw benefits in the same year and about 80% said they increased their revenue during that time.
In addition, 51% said they plan to invest $1 million or more in supply chain technology in 2024.
“Several factors are driving this surge, including advancements in technology, and the need to be agile and resilient amid increasing disruptions and more,” he said. “Technological advancements offer a faster return on investment for supply chain improvements as businesses recognize the tangible benefits of investing in areas like automation and data analytics.”
AI is a Key Technology
The results in Cleo’s study echo somewhat those in a more recent report by software maker Epicor, which found that more than half of the supply chain companies it surveyed are using AI, automation or machine learning technologies for at least one supply chain management application to deal with escalating costs, and that 63% of high-growth businesses – those with revenue growth of at least 20% over the past three years – have integrated generative AI into their supply chain operations.
Epicor’s 2024 Agility Index, created in conjunction with Nucleus Research and released in late June, “underscores the growing adoption of AI and other automation technologies as an essential factor in enabling supply chain businesses to better thrive and compete,” Vaibhav Vohra, chief product and technology officer at the company, said in a statement. “These cognitive capabilities are coming together to empower workers and their businesses to more readily adapt to shifting market conditions and better serve their customers.”
This comes as the focus on supply chains increases. According to analysts with Fortune Business Insights, the global supply chain market size, which was at $23.58 billion last year, is expected to jump from $26.25 billion this year to $63.77 billion by 2032. They noted that geopolitics, labor shortages, the pandemic lockdowns and weather all created bottlenecks, rising costs and disruption in supply chains.
In particular, the COVID-19 shutdowns move companies to software solutions to streamline operations, with the “increasing digitization of enterprises and increasing government policies favoring the implementation of digital technology software drive the market’s growth,” they wrote.
Revolutionizing Supply Chains
Like everything else in business, that now includes AI.
“AI is revolutionizing supply chains, offering solutions to many problems the industry faces,” Cleo’s Patel said. “From demand forecasting and strengthening communications to enhancing visibility and optimizing logistics, AI can significantly improve efficiency and agility. That’s why 33% of responding companies [in Cleo’s study] turned to generative AI in 2023 to combat supply chain disruptions and 30% are planning to leverage the technology in 2024.”
In Epicor’s report, respondents said they are integrating generative AI into digital supply chain operations for such functions as product descriptions, customer service chatbots, queries using natural language and in-application help.
About 72% of organizations said they’re using the technology for customer service chatbots, which emerged as the most important use case because of its ability to streamline customer interactions. In addition, 67% said they use generative AI to create product descriptions by analyzing customer sentiment and forecasting market demand.
“Despite the promise, AI has areas for improvement as it continues to develop and businesses learn how to utilize it efficiently,” Patel said. “For example, the cost of training over large data sets, the lack of control over data outputs, challenges with data quality and availability, as well as ethical considerations can create obstacles for organizations investing in their supply chains.”
That said, the quick results that organizations saw from the use of AI and other technologies “underscores the importance of organizations prioritizing these investments,” he said. “As economic trends and geopolitical events continue to impact organizations’ ability to meet their business commitments, it should give the industry hope that businesses are actively seeing the need to be agile and are taking action to achieve that business resiliency.”
