AI In The Supply Chain: It's More Than Just Big Data

As retail continues to become digitized, one intersection of opportunity is revamping supply chain management to connect popular trends and bring data driven insight into retail strategies. Recently, OpenText’s Mark Morley — Director, Strategic Product Marketing for Business Network — took time to answer questions about how supply chain management can shape retailers’ use of AI and more.

Q: How can AI help with retail operations?

Morley: Big Data and AI allows retailers to analyze trends from previous purchases and shopping seasons, combined with current purchasing behavior to predict which products will be in demand in the future. By gaining deeper visibility into the status of various transactions like purchase orders, shipments and inventory reports, retailers can improve product availability and increase customer satisfaction. Ultimately, if retailers are equipped with better and more accessible real time data to ensure product availability, it helps improve customer satisfaction levels and contributes to improved downstream sales.

Q: What role does AI play in creating supply chain efficiency, especially when considering resource-intensive processes such as inventory management, picking, packing, and shipping?

Morley: Deploying AI helps better integrate data sets which have traditionally been isolated in separate supply chain operational systems. Some of these data sets — order management, inventory management, shipping, warehouse management, e-commerce, and transportation management — should be unified in order to provide supply chain management a clearer picture of where inventory is located. As a result, retailers can plan their inventory requirements and refer back to historical sales of their products from earlier years to accurately forecast which products will be in demand next season, as well as to prevent out-of-stock situations with low inventory.

Q: How will leveraging data-driven analytics in the supply chain help a retailer stay ahead of the competition and foster innovation?

Morley: Information is the key to customer-centric initiatives. Using predictive analytics to harness supply chain network data, retailers will develop more sophisticated relationships to serve customers across channels. Establishing smart and successful retail trading networks that combine data to monitor, analyze, and report on consumer demand, inventory availability, and supply chain performance will enable retailers to stay competitive as the retail landscape evolves. Being able to learn and predict future buying patterns will radically transform the way products are created, sourced, and sold through today’s retailers.

Q: What are some practical uses of the data being collected on inventory and what analysis can be performed on that data?

Morley: One important example of using data analytics to improve inventory includes the enhancement of channel-based merchandise presentation. By combining sales data and inventory designated for different channels, retailers and vendors can better plan merchandise allocations based on fulfillment strategy. Another use is the expediting of customer fulfillment. With access into real-time visibility into available inventory at a vendor’s warehouse, retailers can increase customer drop-ship partnerships. And by combining vendor inventory with inventory available across the retailer’s distribution network, retailers can decide at point-of-purchase the fastest and most effective fulfillment point for a customer’s order.

Q: Supply chain management has seen major shifts in the past decade. What does the supply chain of the future look like and what role will AI play in that?

Morley: AI will play a significant role on the supply chain as more retailers look to harness all the information contained in all areas of their business. AI will close the gap between a retailer’s in-store and e-commerce operations along with supply chain management to create the "endless aisle," a process that allows a customer to purchase a product from a store even when that item is out of stock within that particular store.

For example, a retailer can use interactive screens or kiosks to make its entire product catalog available whenever the customer requires it. Behind the scenes, AI will continue to allow retailers to work closely with their suppliers to manage the inventory and drop-ship the item to the customer’s home or collection point — often on the same day. In theory, an item may never need to be out of stock again.

Q: Is supply chain security about preventing security leaks, or is it more about knowing how to best react to them?

Morley: Like in all areas of security, prevention is the best cure. Having access to data compiled throughout an entire supply chain is the best way to ensure every organization handling your products — from foreign manufacturers, consolidators, brokers, ocean, sea and rail carriers, to third-party logistics providers — is certified to meet industry standards. In fact, an IDC report, Digital Transformation Drives Supply Chain Restructuring Imperative, shows 42 percent of businesses are driving a digital transformation within their supply chains to better meet global industry standards. This indicates businesses understand the imperative and are utilizing their data streams to help prevent any potential security issues.

Integrating technologies which allow businesses to intelligently analyze the data streams from each of their supply chain partners — and quickly detect any important information or red flags — is the best step in ensuring security throughout an entire supply chain and to meet customer’s expectations.

Q: What steps can businesses — specifically, consumer product goods (CPG) manufacturers — take to ensure their supply chains are as secure as possible?

Morley: Businesses should take a preventative approach by tackling and resolving threats earlier in the process to ensure their supply chains are constantly secure. Using Big Data and AI technologies helps provide businesses with the access to have all of the information at their fingertips, to thoroughly vet all parties involved in the supply chain process, ensure efficient and secure movement of goods, and provide real-time measures to prevent any security threats in the future.

Ensuring you are well placed to analyze and explore insights from the wealth of data created throughout a supply chain is the first and most important step in ensuring security. For CPG manufacturers especially, ensuring and enhancing the traceability of high-value and highly regulated items is vital, and a strong data analytics program is the best way to ensure each of these materials are traceable and identifiable.