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AI boosts supply chain agility

March 07, 2024

Artificial Intelligence (AI) has the potential to enhance supply chain agility, according to a new KPMG report titled “Raise Your AI Short Game to Boost Supply Chain Agility.” The report emphasizes that businesses are grappling with compound volatility, necessitating the need for supply chain flexibility. AI emerges as a technology that can help companies anticipate market volatility, make complex network decisions, and achieve business objectives in the short term. In fact, 57% of the executives who participated in the 2023 KPMG Global Tech survey, stated that AI will help them achieve their short-term goals.

The report further suggests that AI can be incrementally deployed to generate value within months, not years. Utilizing the right approach, AI - both traditional and generative - can improve fiscal year performance while accelerating outcomes of long-term investments.

“Long-term supply chain investments can be challenging coming out of an inflationary period that saw aggressive interest rate hikes,” said Jim Lee, Supply Chain AI Leader at KPMG LLP. “Interim solutions are needed to provide supply chain flexibility in the short term. Maintaining focus on the short game is crucial for success in the long term, and AI can help organizations achieve this.”

Additional key points from the report:

  • AI can generate incremental value at a lesser cost, making it a key technology for achieving short-term business objectives in supply chain.
  • A manufacturing organization used AI to address short-term demand volatility, resulting in a 20% increase in overall plant capacity and negating the need for physical expansion.
  • A distribution organization used AI to shift from reactive retention to proactive prevention of employee turnover, enabling management to target a 40% reduction in attrition.

“Supply chain organizations face the challenges of labor attrition, activism, and availability, with labor strikes over the past year that have resulted in significant productivity losses,” added Lee. “While automation is becoming central to long-term strategies, AI can help mitigate losses in the short term by anticipating labor market variation.”

Regarding supply chain capital requirements, Lee said, “The high cost of capital and difficulty in obtaining financing has hindered supply chain network expansions over the past year. But the use of AI and advanced algorithms can help optimize asset utilization, allowing for more efficient use of resources and reducing the need for additional capital.”

In conclusion, the KPMG report highlights the transformative potential of AI in boosting supply chain agility. AI has emerged as a crucial technology for supply chain organizations to navigate ongoing market volatility and competitive pressures.

To learn more about the report, and/or arrange an interview with Jim Lee, please contact Andreas Marathovouniotis.

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