Proving the Business Case for the Internet of Things

Retailers embrace AI to transform supply chain

Steve Rogerson
October 3, 2018



Half of retailers are embracing artificial intelligence to transform their supply chains, according to a survey from Dallas-based Symphony Retail AI, which reveals that slow pace of innovation and inability of current technology to support the business are among retailers’ top drivers for AI adoption
 
Symphony Retail AI is a provider of AI-enabled decision platforms and customer-centric insights that drive validated growth for retailers and consumer packaged goods manufacturers.
 
The survey of North American retailers identified the key challenges in supply chain management for high-volume retailers, bringing awareness to issues such as disparate, disconnected systems, poor demand forecasting accuracy, and the inability of current technologies to support business growth. The study also provides insight into the reasons why retailers believe a new generation of AI can help solve these problems, and the supply chain areas where AI will have the greatest impact.
 
Most retailers surveyed have confidence in their allocation and inventory planning software, but 48% rate their forecasting technology as average to very poor. While they would prefer that each supply chain component worked together to enable harmonised demand flow across the organisation, few retailers have established a unified process.
 
The challenge for retailers is that they lack connected systems – 36% of survey respondents indicated that they have separate demand planning, replenishment, allocation and order management systems for store and ecommerce orders. Combined with the fact that 28% don’t manage each of their modules on the same platform, it becomes clear that disparate demand replenishment systems are a significant burden to efficiency.
 
The survey also reveals that the pace of innovation is a significant issue, with 43% of retail supply chain professionals saying their technology can’t keep up with business demands. And 42% describe less-than-optimal synchronisation between their inventory and channels, and nearly as many worry about fulfilment complexities, stocking inefficiencies and high product lead times.
 
When they do invest in technology, organisations are most inclined to spend on systems that increase stock availability and decrease stock holding, and 44% of supply chain professionals invest in technology because their existing systems are unable to sustain growth.
 
To keep reasonable service levels, retailers often tend to overstock, but then over course-correct and understock instead. The impact of this on supply chains is huge. According to the survey, 43% of respondents say they’re challenged by lack of real-time visibility of all supply chain inventory. However, six in ten supply chain professionals say their organisation is actively taking steps to address this hurdle and increase inventory visibility.
 
AI and machine learning holds enormous potential to improve supply chain efficiency, and forward-looking retailers are already investing in these technologies. Retailers say AI’s greatest potential to improve supply chain management relates to quality and speed of planning insights, while nearly half of all respondents identified demand management as one of the top three areas for AI in the next five years.
 
A third of professionals surveyed claim to have incorporated AI capabilities into their supply chain management processes, and one in four is working towards that goal. AI is poised to enhance every link in the supply chain, delivering faster, more reliable demand insights, quality management capabilities and real-time updates along the way.
 
“Today’s retail supply chain is being reinvented because of the complexities of providing goods to customers,” said Patrick Buellet, chief strategy officer at Symphony Retail AI. “As grocery retail evolves to become more of a destination for shoppers, supply chain efficiency is more critical than ever. There’s also a constant backdrop of rising cost of goods, which cannot simply be passed on to the customer. And today’s increasing focus on fresh and prepared meals adds additional challenges of accurate forecasting to meet customer expectations. Even though retailers are challenged by the pace of innovation, winners are investing in new technologies, particularly artificial intelligence and machine learning. These can boost productivity, and greatly improve the accuracy of information for better decisions throughout the supply chain.”
 
Supply chain leadership roles from 50 North American retailers were interviewed for the survey, with most respondents from large or mid-size grocery organisations.