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10/29/2021

The Holidays are Coming: How AI is Helping the Supply Chain Keep Up

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The holiday season is typically the hottest period of the year for retailers. However, with concerns around product availability and delays already leading consumers to jumpstart their holiday shopping efforts, retail supply chains are beginning to feel the strain. And unfortunately, many retailers are fearing that their infrastructure may not be able to keep up. 

With that in mind, retailers are looking at ways to drive greater efficiency in their supply chains and make their operations much more reliable, resilient and adaptable. Enter AI.

From sourcing to cost management, today’s retail supply chain is as complex as it is has ever been, and AI is helping retailers meet some of the pressing challenges they face head on. Here are a few areas in particular where AI is paying the biggest dividends for retailers.

Product Accessibility

Retailers have done a fantastic job in making their products accessible to customers in unprecedented circumstances over the last couple of years. Whether it is through BOPUS innovations or contactless delivery, the retail shipping and delivery landscape is far more sophisticated than it was prior to the pandemic.

However, this success also comes at a price for retailers. Thanks to the expansion of delivery options, customers have now come to expect a new level of accessibility to the products they are looking for. And during high-volume times, such as the holidays, meeting this widespread demand can be a nightmare for retailers that do not have the necessary technology infrastructure in place.

[See also: RIS Supply Chain Tech Study 2021]

AI is helping retailers adapt to these challenges by enabling them to unlock new fulfillment and inventory management opportunities. For example, thanks to real-time data, retailers can turn their physical store locations into “micro-fulfillment” centers, allowing locally available stock to be shipped to a nearby consumer’s home instead of having it shipped from a distant warehouse  thus eliminating long shipping delays.

AI is also allowing retailers to forecast with much greater accuracy where certain stock may be needed ahead of time so that customers can purchase the products they need in-store at the first time of asking.

Improving Risk Assessment and Resilience

One of the biggest lessons retailers have learned from the COVID-19 pandemic is that being able to quickly assess risk and make adjustments on the fly is imperative. However, doing so is of course easier said than done.

Today’s retail supply chain is not only incredibly complex but vast in its reach. Therefore, a disruption in Berlin could have significant ramifications on product availability in Tokyo. And without the ability to sense the disturbances ahead of time and put contingencies in place, these disruptions can have not only massive consequences on a retailers short-term revenue but can leave a long-term blemish on their customer loyalty and experience.

AI is helping retailers address these risks head-on. Whether it be through more accurate forecasting or finding alternatives in real-time, AI is allowing retailers to build more resilient supply chains that are not only more impervious to risk but far more adaptable should a disruption occur. Meaning, retailers now have a far greater level of preparedness than they have ever had before.

Protecting Uptime

Physical breakdowns in the supply chain are the number one most disruptive force that any supply chain organization and professional have to cope with. But what if we could predict when a piece of machinery may be on its last legs or take proactive measures to ensure that machinery wear and tear never reaches a catastrophic level in the first place? With AI we can.

Thanks to innovations in AI and IoT, supply chain professionals are able to bring maintenance operations to a whole new level. Through improved onboard sensor and real-time data flow supply chain teams can oversee performance on a component-by-component basis so that they proactively maintain machinery and eliminate unanticipated downtime. This will not only help deliver more efficiency, but will help supply chains protect their revenues in what continues to be an incredibly challenging period due to the pandemic. 

The current supply chain crunch is a stark reminder for many supply chain organizations that a “return to normal” is not looking like it will be an easy feat. However, by leveraging AI and tweaking priorities so that operations can be more dynamic and intuitive, retail supply chain organizations can begin to ease some of the strains they are feeling.

Sandeep Bhogaraju is a client partner at Fractal Analytics.

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