The global positioning system revolutionized transportation for every person and every business. What once seemed impossible in terms of effortlessly navigating from point A to point B was now well within reach.
Not surprisingly, the world took full advantage. Demand for services skyrocketed, and transportation grew increasingly complex. Today, mega corporations deliver billions of packages every year with next-day service, and hopelessly complicated “spaghetti junctions” around the world make getting lost a still-very-real possibility for modern drivers. How does GPS keep up? By continuously evolving, launching new satellites as recently as last year.
Supply chain logistics are facing similar challenges with tariff-induced uncertainties looming on the horizon. In 2023, more than 90% of industry professionals reported problems with their supply chain footprint. Meanwhile, nearly every executive has been looking to reevaluate their supply chain management since the COVID pandemic. This comes as no surprise when one considers the fact that supply chain disruptions can cost larger organizations up to $82 million per year.
The only solution is to keep evolving. Much like GPS technology rose to meet the demands of its absolutely essential future, supply chain professionals must harness the power of artificial intelligence in order to fully optimize and persistently monitor each area of logistics. In fact, there are four well-defined reasons AI tools are essential for the uncertain future of supply chain management.
1. They never stop evaluating risk. In a traditional sense, end-to-end supply chain visibility is extremely difficult to accomplish. That’s likely why only around 6% of companies actually achieve it. However, with help from the latest AI assessment tools, organizations can constantly scrutinize their entire network for all areas of risk, including cyber threats, sanctions, modern slavery and payment times reporting systems (PTRS). These evaluations never stop running, and they are precisely aligned to any pre-selected standards.
What the numbers say: Eighty-six percent of executives believe their organization needs to invest more technology into evaluating supply chain risk.
2. They solve the riddle of ‘good’ tail spending. An organization’s “maverick spend” is the result of many factors. That said, the majority of those factors are confined to user error and a lack of centralization, both of which are directly refuted by AI integration. With the right guidance, the latest AI tools can reduce off-contract spending, centralize all of a company’s procurement, and immediately identify areas where rogue spending might benefit the bottom line.
What the numbers say: It’s estimated that tail spend accounts for an up to 16% loss in negotiated savings across all categories.
3. They rise to meet the latest regulatory standards. High-income countries are setting increasingly stringent standards for supply chain governance, and middle-income countries aren’t too far behind. On top of that, tariffs are injecting uncertainty into supply chains around the world. AI tools improve data quality and reporting procedures, which naturally prepares any company to hit a target that is not only increasingly small — but always on the move.
What the numbers say: Tariff concerns from the United States and abroad have already altered freight patterns and slowed down transportation metrics.
4. They easily rationalize and diversify vendors. Supplier rationalization and diversification tell a complicated story. According to a survey of chief procurement officers, companies are fairly split about whether to expand or to consolidate. However, the end goal in this post-pandemic world is always the same: less overreliance and greater geographical efficiencies. Whether it’s reshoring, near-shoring or high-performing consolidation, AI tools can unlock a more resilient supply chain network.
One statistic to remember: Only 8% of CPOs believe their companies are already thriving in the “new normal” of procurement operation.
Dave Curtis is the chief technology officer at RobobAI, a global fintech organization leveraging AI tools and technology to help companies ethically transform their global supply chains.
