AI has Room to Grow in the Supply Chain

Published On January 3rd, 2023.

The global supply chain market is rapidly evolving in this technological era to improve customer experience all over the world. Global supply chains are applying artificial intelligence (AI) as part of the industry’s march toward digital transformation.

AI has proved its worth in various industrial segments, including e-commerce, manufacturing and IT. Like these sectors, the electronics supply chain is global and demand for AI will continue to expand.

The supply chain is a vast network of individuals, companies, services and technologies involved in the creation and distribution of a product. It involves the entire process of delivering goods from supplier to manufacturer and vice-versa, eventually delivering to the end-user.

When it comes to managing such a huge network, logistics and transportation play a significant role. Covid-19 created a major disruption in the global supply chain, resulting in a shortage of raw materials and chips, negatively impacting the automobile and electronics industries. Some of these pressures are beginning to ease, aided in part by technology.

AI in the supply chain

For example, smart devices and systems like AI robots, machine learning technologies, and other software and applications are increasingly used in the supply chain. Artificial intelligence can operate equipment without a human supervisor, reducing the need for labor. The supply chain is driven by enormous amounts of data. Machines now learn data processing in a transparent and approachable way that improves workflow thanks to advancements in computing and coding.

Opportunities for AI

Current market trends suggest AI will become a critical tool in global supply chain management. Demand for automation systems for commercial and business purposes will increase significantly and the supply chain is one of the five largest market opportunities for AI, research indicates.

Apart from this, the advent of 5G technology in several countries will also have a positive impact on AI in the supply chain. Machine learning, natural language processing (NLP) and computer vision are among the broadest applications.

There are challenges, however. Widespread use of AI in the supply chain requires the proper infrastructure to operate effectively. Also, the high cost incurred for replacing existing systems is discouraging some end-users. Research to minimize the cost and increase the efficiency of such integrated systems is ongoing.

Growth analysis

Market researchers forecast AI applications in the supply chain could grow by as much as 37 percent CAGR through 2023. By the end of 2023, the supply chain AI market will be valued at $3 billion to $4 billion.

North America dominates the global share of that market thanks to technology advancement and investment by the U.S., Canada and Mexico. Europe and Asia, respectively, are also increasing their share of the market at a rapid pace.

McKinsey reports adopters of AI-enabled supply-chain management have improved logistics costs by 15 percent, inventory levels by 35 percent and service levels by 65 percent. High-performing adopters expect to increase their AI investment, the firm said.

Source: EPS News "

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