Supply Chain Leaders Earmark Generative AI for Future Success

12/01/2024
cargo ship carrying container for business import and export logistic supply chain,sea freight
cargo ship carrying container for business import and export logistic supply chain,sea freight

Generative AI Gains Momentum Among Supply Chain Executives

Half of supply chain leaders are planning to implement generative AI (GenAI) within the next year, with a further 14% already in the process of doing so, as revealed by a recent industry survey. The results also indicated that chief supply chain officers (CSCOs) are allocating, on average, 5.8% of their department’s budget to the application of GenAI.

“CSCOs view GenAI as a key tool in supporting their wider digital transformation goals,” said Noha Tohamy, a distinguished VP analyst in Gartner’s Supply Chain Practice. The majority of supply chain leaders are already utilising advanced analytics and other supply chain technologies. They recognise the potential of GenAI to increase productivity, enhance business agility and cut costs. The challenge for many of these organisations in the coming year will be to expand their pilot projects to wider adoption.”

In November 2023, Gartner surveyed 127 industry leaders about their plans to utilise GenAI within their operations in 2024. Almost two-thirds of respondents are planning to, or are already in the process of, implementing the technology, with only 2% of respondents having no plans to do so within the next year.

Opportunities and Challenges in GenAI Adoption

While the responses indicate a promising future for AI adoption, they also reveal that supply chain functions are trailing behind other enterprise functions, such as marketing and sales, in terms of adoption. This could provide an opportunity for supply chain organisations to establish themselves as “fast followers”, benefiting from the early learnings and technology investments of other functional partners. However, supply chain leaders might be more cautious in adopting emerging technology due to higher security and functionality concerns compared to other enterprise use cases with less at stake, like advertising.

The survey also revealed that the most impactful supply chain use cases for GenAI include areas such as code augmentation, providing deeper insights into supply chain key performance indicators, and staff assistance chatbots. Supply chain leaders are backing up their implementation plans with significant budget allocations – they’ve committed 5.8% of their budgets to the technology, along with additional employee spend to deploy GenAI. Around 65% of respondents said they will hire dedicated staff and experts to help deploy the technology in 2024.

However, the introduction of new technologies is not the only concern for supply chain leaders. An earlier Gartner study highlighted that workforce engagement is a significant issue, with industry turnover a third higher than pre-pandemic levels. Therefore, effective people management will be crucial to the successful adoption of new technologies and the overall success of digital transformation efforts.

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