Grocers Embrace AI to Optimize Supply Chain

Half of retailers are embracing artificial intelligence (AI) to transform their supply chain operations, new research from Dallas-based technology company Symphony RetailAI has revealed.

"Strengthening the Retail Supply Chain," which was conducted by Chicago-based retail intelligence firm EnsembleIQ, Progressive Grocer's parent, and surveyed mostly grocers, found that one in three of those surveyed claims to have incorporated AI capabilities into his or her supply chain, and one in four is working toward that goal. The consensus among retailers is that AI's strongest potential to improve supply chain management relates to quality and speed of planning insights, while nearly half of respondents identify "demand management" as one of the top three areas for AI in the next five years.

The majority of retailers surveyed are confident in their allocation and inventory-planning software, but nearly half (48 percent) rate their forecasting technology as average to very poor. While they would prefer that each supply chain component work together to enable harmonized demand flow across the organization, few retailers have established a unified process.

Retailers' challenge is that they lack connected systems: More than one-third (36 percent) of survey respondents said that they have separate demand-planning, replenishment, allocation and order management systems for store and ecommerce orders. Add the fact that 28 percent don’t manage each of their modules on the same platform, and it becomes clear that disparate demand replenishment systems are a significant burden to efficiency.

Also a significant issue is the pace of innovation: 43 percent of retail supply chain professionals have technology that can't keep up with business demands. Moreover, 42 percent described less-than-optimal synchronization between inventory and channels, and nearly as many worry about fulfillment complexities, stocking efficiencies and high product-lead time.

When they do invest in needed technology, organizations are most inclined to spend on systems that increase stock availability and decrease stock holding, and 44 percent of supply chain professionals invest in new technology because their existing systems are unable to sustain new 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: 43 percent of respondents are challenged by lack of real-time visibility of all supply chain inventory. However, six in 10 supply chain professionals are actively taking steps to address this hurdle and increase inventory visibility.

"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 RetailAI. "As grocery retail evolves to become more of a destination for shoppers, supply chain efficiency is more critical than ever."

Added Buellet: "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."