Artificial Intelligence could be the solution to resolving many retail supply chain challenges.
As a retailer, we face several challenges when it comes to supply chain management. From keeping up with demand forecasting to maintaining inventory levels, it can feel like a never-ending journey to finding balance.
But what if we told you there was a solution to most of these challenges? That’s where artificial intelligence or AI comes into the picture.
According to a Cisco study, 83% of businesses deem AI as a leading priority in their business strategy. One such strategy includes efficient supply chain management.
With AI, you can make better, data-driven decisions that ultimately improve your bottom line. Plus, by automating certain aspects of supply chain management, you can free up time to focus on other important areas of your business.
Now, the billion-dollar question is what areas of your supply chain can you automate with AI? Don’t worry – we’ll cover that in this guide to AI in retail supply chain management.
"According to a Cisco study, 83% of businesses deem AI as a leading priority in their business strategy."
How to Use AI in Retail Supply Chain Management
Here are some effective ways AI can conveniently slot into your chain management workflow.
1. Enhancing Supply Chain Visibility
To effectively manage your supply chain, you need to have a clear picture of what’s happening at every stage. But with so many moving parts, it can be difficult to keep track of everything. This is the reality of 57% of companies. But fortunately, that’s where AI comes in.
Monitoring your supply chain with AI gives you real-time insights into what’s happening at every stage of the process, ie, increased viability. With this, you can easily identify potential issues before they become major problems. It also helps you make more informed decisions about inventory levels, shipping schedules, and more.
For example, let’s say you’re a clothing retailer with a global supply chain. One of your suppliers experiences a production delay, which means your inventory won’t arrive on time. Without supply chain visibility, you may not realise there’s an issue until it’s too late, which could result in lost sales and angry customers.
But with AI tools such as Infor Nexus, IBM, etc., you can monitor the production process in real time and receive alerts when there’s a delay. This allows you to quickly adjust your inventory levels or shipping schedules to minimise the impact on your business.
By leveraging the power of AI, you can stay ahead of potential issues and ensure your business runs smoothly at all times.
2. Mitigating Cybersecurity Risks
With the rise of eCommerce and online transactions, cybersecurity threats are becoming increasingly common in the retail supply chain. These threats can include everything from phishing attacks to ransomware and can have serious implications for your business.
This is why you might want to consider using AI in finance and your online dealings. It offers a great way to proactively identify and mitigate potential threats before they become problems. You can use it to monitor your supply chain for suspicious activity, detect anomalies, and even predict potential threats before they occur.
Let’s assume you’re a retailer that uses a third-party logistics provider to handle your shipping and logistics. If that provider experiences a cyber attack, your business could be at risk. But with an AI tool such as Sophos Intercept X, you can monitor the provider’s network in real-time and receive alerts if there’s any suspicious activity. This allows you to quickly respond to the threat and minimise the impact on your business.
"By leveraging the power of AI, you can stay ahead of potential issues and ensure your business runs smoothly at all times."
3. Demand Forecasting
As a retailer, you must be able to accurately predict future demand for products. Only then can you optimise your inventory levels, production schedules, and shipping logistics?
However, traditional methods of demand forecasting can be time-consuming and inaccurate, leading to inventory shortages or overstocking.
AI can help solve this problem by improving demand forecasting accuracy through advanced analytics and predictive algorithms. By analysing historical data, market trends, and even weather patterns, AI can generate more accurate future demand forecasts and help you make better informed decisions.
Let’s consider this instance. Say you’re a grocery retailer trying to forecast demand for certain products during a holiday weekend. Using traditional methods, you may look at sales data from the previous year and adjust your inventory levels accordingly. But this approach doesn’t take into account changing consumer preferences or external factors such as weather.
With AI-powered demand forecasting tools, you can incorporate a wider range of data sources and generate more accurate predictions. This allows you to adjust your inventory levels, production schedules, and shipping logistics to meet demand in real time, reducing the risk of overstocking or inventory shortages.
One example of an AI-powered demand forecasting tool is Remi AI. This platform uses machine learning algorithms to analyse historical sales data, market trends, and other factors to generate more accurate demand forecasts. By incorporating AI into your demand forecasting process, you can optimize your supply chain operations and improve overall efficiency.
4. Autonomous Vehicles and Drones
Drones and autonomous vehicles can help you streamline your supply chain operations, reduce logistics costs, and improve delivery times.
Autonomous vehicles are self-driving vehicles that can transport goods without the need for a human driver. Drones, on the other hand, are unmanned aerial vehicles that can deliver packages directly to customers. Both technologies have the potential to revolutionise the supply chain industry.
When you use AI-powered vehicles, you can improve delivery efficiency and reduce the risk of accidents. AI algorithms can analyse data in real time and make adjustments to the vehicle’s speed, route, and other factors to ensure safe and efficient transportation.
At the moment, Amazon uses AI-powered drones (Amazon Prime Air) to deliver packages to customers. By analysing data from weather patterns, traffic patterns, and other sources, drones can make adjustments to their flight path to avoid obstacles and ensure safe delivery.
5. Optimising Inventory
One of the most important aspects of supply chain management is inventory planning and optimisation. You need to ensure that you have enough inventory to meet demand, but not so much that you’re left with excess stock that ties up your capital.
By using AI to optimise your inventory, you can make more informed decisions about how much stock to hold and when to replenish it. AI algorithms can analyse data from across your supply chain, including sales data, production schedules, and shipping times, to determine the optimal inventory levels for your business.
You can use AI to analyse historical sales data and identify patterns in purchasing behaviour. By understanding which products are popular during different seasons, you can adjust your inventory to the optimal level. This ensures that you have enough inventory on hand during peak seasons while minimising inventory levels during slower periods.
What’s more, you can also take advantage of AI for your reordering process. This ensures that you’re automatically replenishing your inventory when the stock reaches a particular threshold. Ultimately, it helps you save time and resources.
"With AI-powered demand forecasting tools, you can incorporate a wider range of data sources and generate more accurate predictions."
The use of AI in supply chain management is rapidly growing and for good reason. With the ability to enhance visibility, improve inventory optimization, and ensure cybersecurity, AI provides a wealth of benefits for retailers. By leveraging the power of AI, retailers can improve efficiency, reduce waste, and increase customer satisfaction.
However, it’s important to note that AI is not a one-size-fits-all solution. It might not always apply to your entire supply chain.
Thus, the best way to use AI will depend on the specific needs and goals of your business. Before implementing any AI solutions, it’s important to meet with your supply chain manager and conduct a thorough analysis. Then identify areas where AI can provide the most value. Doing this, you’ll notice a more streamlined supply chain performance!
Author’s Bio: Timothy Boluwatife is a web3 content/copywriter at Mozaic Finance, where he helps educate people on the latest trends and strategies in the web3 space. Mozaic is a web3 startup that offers AI-driven financial and yield farming strategies for people of all levels of expertise. He has extensive experience writing for B2B/SaaS and generating hot leads.