Gen AI key to overcoming supply chain complexity: report

Companies without digital transformation may fail to sustain business processes, Boston Consulting Group warned.

Companies must embrace generative artificial intelligence (gen AI) to navigate increasingly complex supply chain technologies, according to a report by Boston Consulting Group (BCG). 

BCG noted that many companies struggle to achieve the vision of AI-driven supply chains due to an overemphasis on AI’s analytical capabilities, often neglecting its potential for adaptive learning. Traditional AI solutions, which are frequently complex, overwhelm supply chain players, leading to low adoption rates and diminished returns on investment. 

Additional barriers to AI adoption in supply chains include difficulties integrating AI into outdated processes, fragmented data systems, and a lack of employee awareness regarding AI tools. 

BCG warned that without digital transformation, companies may fail to sustain fundamental business processes, underscoring the urgency to overcome these obstacles to advance supply chain management. 

Gen AI simplifies earlier implementations by streamlining user interfaces, automating operations and decision-making, and extracting actionable insights from large datasets. 

By embedding tools into user-friendly workflows, gen AI democratises access to advanced analytics, such as forecasting and supply planning, which previously required specialised expertise. This enables faster, more accurate decision-making and enhances human-machine collaboration. 

Gen AI also integrates disparate systems, facilitating autonomous orchestration of supply chain activities without manual intervention. BCG anticipates these benefits will expand as gen AI deployments mature. 

For companies to effectively transform supply chains with gen AI, they must move beyond traditional AI adoption methods. Successful implementation requires aligning gen AI deployment with business objectives and pinpointing workflows where the technology can deliver the most value. 

Companies should prioritise critical areas, rethink end-to-end workflows, and foster partnerships to ensure gen AI sustainably enhances operations, automation, and analytics. 

Adopting gen AI strengthens data foundations, improves capabilities such as demand forecasting, enhances user experiences, and automates manual processes. 

These advancements significantly boost operational efficiency. For instance, gen AI can accelerate the development of complex applications and supply chain solutions by up to 30%, improving agility. 

It can also increase user adoption rates, with satisfaction and system usage rising by over 60%, whilst reducing administrative and data reconciliation tasks by more than 50%, freeing personnel for higher-value work. 

BCG said gen AI can be adopted incrementally, starting with task-specific point solutions such as chatbots for routine operational tasks. Gen AI can also complement existing planning and execution systems, improving process effectiveness by monitoring disruptions, generating alerts, and simulating responses. 

Advanced gen AI applications involve agents that continuously verify and update master datasets, enabling a rethinking of entire workflows and improving the quality of decision-making. Whilst humans remain integral to the process, gen AI agents automate and enhance operations. 

Fully unlocking gen AIs potential, however, may require significant process re-engineering, BCG said. 

At its most advanced level, gen AI automates cross-functional processes, such as sales and operations execution. Self-organising AI agents coordinate supply chain activities across various functions, fostering a collaborative and efficient system. 

BCG emphasised that successful gen AI adoption requires a structured approach that aligns technical capabilities with business objectives. Companies must set clear strategic goals, identify high-impact areas for gen AI, streamline processes with the technology, and build the right ecosystem for its integration. 

By doing so, businesses can unlock gen AI’s transformative potential and achieve sustainable improvements in supply chain management.