C-Suite Execs Are Steering AI-Heavy Budgets to the Supply Chain

Supply chain funding is part of a “broader digital transformation”.

Global supply chain issues may have incrementally improved in 2023, but don’t tell that to executives tasked with improving inventory transport issues.

A case in point.

According to a recent McKinsey study, “almost every supply chain manager surveyed” reported significant issues over the previous 12 months. Some

“44% reported major challenges arising from their supply chain footprint that required them to make changes during the year. And 49% said that supply chain disruptions had caused major planning challenges,” the survey noted.

While many companies are dealing with supply chain woes by diversifying and localizing their supply chains, the rise of artificial intelligence is significantly influencing supply chain budgets in 2024, Gartner says in a new study.

50% of supply chain decision-makers say they’ll implement generative AI (GenAI) by the end of the year, with an additional 14% already in the implementation stage. Additionally, chief supply chain officers (CSCOs) are dedicating 5.8% of their function’s budget to artificial intelligence tools and applications.

Only 2% of the 127 CSCOs say they won’t be deploying AI at all in 2024, signaling the increased dependency companies have on AI.

“CSCOs see GenAI as supportive of their broader digital transformation objectives,” said Noha Tohamy, a Gartner supply chain analyst. “Many supply chain leaders were already leveraging supply chain technologies and advanced analytics, and it’s clear from this data that the majority also see the value in GenAI to enhance productivity, improve business agility, and reduce costs.”

In doing so, supply chain officers face some roadblocks. “The challenge for many of these organizations over the next 12 months will be in scaling their pilot projects to broader adoption,” Tohamy adds.

Major Supply Chain Uses for AI

The Gartner report also shines a light on what supply chain management has in mind for artificial intelligence applications. At the top of the list is “code augmentation, providing more insights into supply chain key performance indicators and staff assistance chatbots,” the survey noted.

Additionally, 65% of executives surveyed said they would hire a dedicated staff and experts to help with their 2024 AI rollouts.

“CSCOs may also be factoring in impacts on employee roles required of their staff as they shift to higher value-add activities, while lower-level tasks are increasingly automated,” Tohamy added.

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