Can GenAI Save Supply Chain Planning?

Author: Jan Snoeckx

Finally, a new foundational technology is entering the supply chain planning domain: generative artificial intelligence.

Since the launch of ChatGPT in November 2022, investments in AI (especially generative AI) have skyrocketed. This technology is being embedded into various tech markets, and supply chain planning (SCP) is no exception. Over the past few months, generative AI has rapidly risen within SCP technology sectors at a scale and speed unseen over the last decade.

We are constantly receiving announcements and press releases from SCP technology providers. More launches are expected in the second half of this year as suppliers prepare for conference season. Due to the attention and investment from tech providers, it is one of the fastest-moving points on multiple Gartner hype cycles. Not only are tech providers investing, but non-tech companies are also looking for ways to leverage generative AI.

As a technology enthusiast and former innovation lead, I am very pleased to see this new, potentially transformative technology entering our world. After the wave of enthusiasm around machine learning (ML)—which is still ongoing (and with good reason!)—seeing a technology gain attention centered on user experience (UX) was long overdue.

And we do need this technology.

How Is Our Digital Adoption?

Gartner data shows that our digital adoption in SCP (i.e., the extent to which we use implemented solutions) is extremely low. Only about 15% of planning organizations report an adoption rate exceeding 75%. Over the years, we have focused on optimizing algorithms within SCP solutions, particularly end-to-end demand and supply balancing calculations.

While this is indeed important, historically, we have neglected UX. This bias has negatively impacted user adoption of these solutions and thus their value proposition. In recent years, there has been an increased focus on UX in the SCP technology market, but it remains insufficient. However, generative AI reignites the spark for UX, bringing a fresh perspective and ideas to the field, which fills me with hope.

Generative AI has significant potential. There is no doubt about that. It can be used in many different contexts and use cases, such as those outlined below.

Not Just Generative AI

However, as technology enthusiasts, we must remain vigilant.

SCP technology providers must avoid putting all their eggs in one basket from an innovation standpoint by overly focusing on generative AI. There are many other equally (if not more) important areas to increase overall adoption and usage of planning technologies. For example, having a unified data model, robust and explainable analytics, scenario planning capabilities, and flexible, intuitive user interfaces are all extremely important and should be prioritized.

Moreover, many technology providers position generative AI as a “digital assistant,” which is good. However, this viewpoint is inherently narrow in scope. To truly leverage this new technology, we must view generative AI as an equal partner to planners, working alongside them to drive higher-quality planning decisions and outcomes.

Should We Prioritize Generative AI?

Yes, of course. The potential of this new technology is significant. The Gartner community also clearly indicates their belief in the transformative power of generative AI and its potential benefits (see below).

Is generative AI a game-changer? Yes, absolutely. Will it save supply chain planning? Probably not.

What I mean by this: We must continue to push boundaries and think of new ways to use generative AI, especially in the UX domain. However, we should not compromise too much on other equally important tools that also require attention and investment for progress in key areas. In this fast-paced world, shiny new objects are indeed captivating; they seem like attractive shortcuts. Generative AI can be a powerful SCP partner, but not at the expense of all the other tools we still need to adopt.

Source: Gartner