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05/13/2022

AI and the 2022 Summer Retail Supply Chain

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AI concept, blue circuit board on black background

Retail has been one of the hardest hit sectors by the supply chain disruptions that have occurred over the past 24 months. And things are not set to get any easier as spring gets under way and refrigerated transportation season ramps up.

Refrigerated season is one of the most congested and hectic times of year, so retailers are no strangers to having to deal with refrigerated headaches even during the best of times. And with a number of disturbances still shaking up the retail supply chain, many retailers are particularly nervous this year as they try to navigate this historically hectic period in the face of unprecedented uncertainty and unpredictability.

[Read more: AI and Automation Unlock Supply Chain Progress]

This has led many retailers to lean more heavily into technology than ever before with many leveraging AI in particular in hopes of drastically improving their flexibility and agility. With that in mind, here are a few ways in which retailers are embracing AI to boost their overall efficiency and goals.

Boosting Internal Connectivity and Collaboration

For decades, the supply chain was synonymous with slow technology adoption and a will to experiment with innovation. However, as the world became enveloped in the COVID-19 pandemic, the supply chain world — regardless of the industry — was forced to drastically ramp up its digital capabilities if it had any chance of coping with the unfolding crisis effectively. 

And because of how long the supply chain had bypassed technology adoption, this meant that the industry in many ways had to start revamping itself from the ground up. Which for many in the retail supply chain translated into serious overhauls of their inter-departmental operations.

Prior to the AI revolution of the last 24 months, retail supply chains across the board were incredibly siloed and marred in ongoing miscommunication as a result. Fortunately, AI has helped to smooth this fragmentation significantly. Using AI, retail supply chains have begun to connect the dots between their various component parts and consolidate everything under one umbrella.

Striking the Right Inventory Balance

Even before the pandemic, carrying costs and stock issues were a huge issue that retailers were trying to grapple with. Moreover, retail supply chain professionals were stuck using outdated data and guesswork to try and forecast demand and how stock should be allocated as a result — something that was virtually impossible to get right. Those days are now gone thanks to AI.

Through AI, companies can now scientifically manage their inventory levels by marrying historic contextual data with current market insights. Furthermore, retailers can maximize efficiency across their entire commerce operations making sure that inventory is balanced properly across, e-commerce, in-store and BOPIS and optimal last mile adjustments can be recommended and made to avoid costly out of stock or spoilage scenarios.

Boosting Resiliency and Visibility

One of the most important use cases for AI in the retail supply chain is how it is helping to boost resilience. The COVID-19 pandemic highlighted the perils of the retail industry’s overreliance on a handful of suppliers in a very big way. This has driven retailers to diversify their supply chains more than they have in decades in hopes of guarding against similar periods of disruption in the future.

And AI is helping them to power this decentralized approach. From geographic disruption forecasting to dynamically mitigating sudden challenges, AI is allowing retailers to not just gain more visibility into their operations, but also build more sustainable and durable supply chains than they ever have before. 

[Related: Unveiling the Transformative Potential of AI and Automation Across the Supply Chain]

In addition, it is also allowing retailers to provide better feedback and updates to customers which is pivotal to maintaining customer loyalty during periods of high stress and uncertainty.

From souring to warehouse operations, AI is shaping up to be one of the most interesting areas in the retail supply chain for years to come. And retailers that are able to implement the technology effectively will not only be able to boost efficiency in the short-term but will be hit to break new ground for years and years to come.

— Philip Melson, Client Partner, Fractal Analytics

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