How Artificial Intelligence Is Making Supply Chain Planning More Sustainable

The supply chain needs a 21st-century overhaul. Artificial intelligence is the perfect candidate for the job

The supply chain has been through the wringer in recent years. From pandemic backups and zero-covid policies to ongoing shortages and war-based disruptions, the global supply chain has been under a unique kind of pressure for nearly half a decade.

While we’ve recovered a certain sense of stability so far, the future is anything but certain. This makes not just management but planning in the supply chain essential. An unstable or overworked supply chain can quickly become inefficient and unsustainable. It can waste resources and increase carbon emissions.

As companies try to efficiently balance supply and demand, consider what-if scenarios, and forecast future activity, they want every tool at their disposal — including artificial intelligence (AI).

How AI Can (and Already Is) Impacting Supply Chain Planning

Before diving into specifics, it’s important to clarify something. Supply chain management and planning are no longer simple roles tasked with keeping resources flowing. McKinsey & Company points out that many organizations have turned their supply chain activities into an opportunity for “dynamically optimizing the company’s global value rather than simply improving the performance of local functions.” The firm refers to these supply chain functions as a “central cross-functional brain.” Supply chains and the individuals and officers that oversee them are becoming an important part not just of how companies operate but how they do so sustainably.

One of the biggest problems with maintaining a sustainable supply chain is the complexities involved. Wrishin Bhattacharya, Technical & Integration Consultant at Oracle, highlights this complexity as a primary reason businesses can’t track the environmental impact of each element within their supply chain. AI is making this possible by providing comprehensive insights and helping make decisions that keep companies efficient and optimized.

As logistics systems grow, AI solutions help identify things like unused inventory, inefficient routes, and excess packaging. Predictive analytics churns data and forecasts the demand for everything from product demand to bubble wrap. Automation and the IoT (Internet of Things) also monitor things in real time. This provides reports with enough time to take proactive measures before waste occurs.

Supply Chain Brain digs further into the ways AI improves supply chain planning sustainability. For instance, it makes it possible to optimize fulfillment location and route efficiency. It can even address nuanced elements like managing a multi-carrier strategy and automating carrier switching.

AI Isn’t Perfect and Needs Oversight

Like any new employee, AI isn’t a seasoned veteran yet. Leaders must recognize that these automated tools are on a learning curve. As companies like Google and OpenAI fine-tune their increasingly sophisticated AI algorithms, they become more capable in theory.

However, it takes someone with a blend of wisdom, creativity, and risk tolerance to discover the right ways to implement these theories — especially within something as fickle as the supply chain. In 2022, BCG and Aera Technology reported that the root cause of inefficient AI in supply chains doesn’t lie in the technology itself “but with how and where companies are applying it.”

That’s where a Chief Supply Chain Officer (CSCO) can make a difference. A competent CSCO can look beyond basic AI analytics and prediction in the supply chain. They can oversee the deployment of AI across multiple supply chain functions, integrating comprehensive data and enhanced decision-making into future planning activity

“A competent CSCO can look beyond basic AI analytics and prediction in the supply chain.”

When you bring together a CSCO and the right AI solutions, the potential for sustainability within the supply chain improves. The combined guidance of a veteran human executive and the immeasurable capabilities of artificial intelligence are giving companies the power to see their supply chain efficiency on all-new levels. It is helping brands build post-pandemic supply chains that can withstand pressure, see inefficiencies coming, and ultimately remain lean, sustainable, and profitable.

At Stanton Chase, we understand the struggles that come with supply chain planning. The perpetual evolution of industry tools and concepts requires a unique person to helm a brand’s supply chain logistics and planning activity. If you need a CSCO, reach out. Our executive search consultants can give you access to the network, resources, and experience required to find the ideal C-level candidate who can guide your brand’s supply chain into a future that may be uncertain but is also filled with promise and potential.

About the Author

Tim Fetzer is a Director at Stanton Chase Nashville with over 10 years of global search experience. Tim has successfully completed searches for various management roles in sales for DAX 40 companies, financial institutions, and start-ups. He has a Bachelor of Business Administration from Hult International Business School in London. Tim is from Germany and has lived in several countries.

Click here to learn more about Tim.