In today’s complex and fast-paced business environment, supply chain management has become imperative for organizational success. In a domain where each factor is interconnected, one of the most pressing challenges faced by companies today is the lack of end-to-end supply chain visibility arising from traditional siloed approaches where each segment operates independently, resulting in inefficiencies, errors, missed opportunities and increased operational costs.
The Depth of the Challenge
Let’s look at some recent statistics to comprehend the magnitude of the challenge. Only 6% of companies report full visibility on their supply chain while an astonishing 69% do not have total visibility. This lack of visibility can culminate in various shortcomings including delays in identifying bottlenecks, inaccuracies in inventory forecasting, and a diminished ability to respond swiftly to market changes.
Siloed information and fragmented data sources make it challenging to track products, manage inventory, and anticipate disruptions effectively. This not only hampers operational efficiency but also results in increased costs associated with excess inventory, stockouts, and expedited shipping to overcome unforeseen challenges.
With regards to supply chain tech investments, a recent survey indicated that the top priority for businesses was driving growth (53%) and optimizing costs (51%). Both these goals can be achieved by turning to Artificial Intelligence (AI) solutions that offer end-to-end visibility.
How AI Can Change the Visibility Game in Supply Chain?
By providing real-time insights into the entire supply chain, machine learning algorithms and predictive analytics make it possible to analyze vast datasets from various supply chain stages, predict demand patterns, identify potential disruptions, and optimize inventory levels seamlessly. This reduces instances of overstocking or stockouts and enables proactive issue resolution, all of which ultimately reduces operational costs and leads to holistic revenue growth!
According to research conducted by IDC, 55% of G2000 OEMs will redesign service supply chains using AI by 2026, meaning over half of these major manufacturers will use artificial intelligence to overhaul how they go about their operations. Another study found that AI and machine learning are seeing the highest spending with regards to investments in supply chain in the next two years. Additionally, 22% of executives said their companies plan to invest at least $5 million in AI technologies.
The Correlation Between AI-Generated Supply Chain Visibility and Holistic Revenue Growth
Let’s take a look at the many ways in which real-time supply chain visibility can lead to holistic revenue growth in an organization.
- Improving Order Management- Accurate end-to-end visibility of order flow and status from customer to internal purchase order allows the company to control the process while also improving customer and internal communication flows. This in turn improves productivity and ultimately increases revenue.
- Improving Planning and Business Processes- By providing total visibility, AI-driven supply chain solutions improve forecasting, planning, and business processes at every stage of the supply chain and thereby enhance operational efficiency. These solutions enable manufacturers to better plan their production operations, improve raw material sourcing, and get accurate insights into production volumes while allowing suppliers to track order backlogs and strategize their inventory management processes. Knowing what’s happening across the entire supply chain network at all times helps businesses make better decisions to build a well-functioning and profitable supply chain.
- Improving Order Management- Accurate end-to-end visibility of order flow and status from customer to internal purchase order allows the company to control the process while also improving customer and internal communication flows. This in turn improves productivity and ultimately increases revenue.
- Delivering Greater Customer Satisfaction- In today’s fast-paced world, customers have higher expectations around on-time delivery, product customization, and tailored customer service. An industry study states that 56% of consumers demanded greater transparency in the delivery process while 38% customers want to only wait one day or less for delivery! Full SC visibility and transparent operations allows organizations to better understand what customers want, meet their expectations and improve customer satisfaction, retention, and acquisition.
- Reducing Costs- By allowing for real-time monitoring of the supply chain with relevant key performance indicators (KPIs), SCV lets businesses detect problems early to reduce risk, minimize impact on profit margins, and boost competitive advantage. It was found that reducing supply chain costs from 9% to 4% can double profits. While the average supply chain cost is 13.2%, top companies have managed to optimize this number to 7.9% and increase their savings by 40%!
- Overcoming Disruptions- Supply chain disruptions can have considerable negative losses in terms of finances (62%), logistics (54%) and reputation (54%). About 40 percent of small businesses in the United States faced supply chain delays impacted by the COVID-19 pandemic. Real-time visibility leads to a more resilient supply chain that will be better prepared to withstand such disruptive events, thereby reducing financial setbacks.
Ultimately, with all the above parameters, the impact on revenue growth is undeniable. This means total supply chain visibility, either directly or indirectly correlates with holistic revenue growth for organizations.
In conclusion, the shift from siloed supply chain management to end-to-end visibility through AI solutions is a strategic imperative for organizations aiming at holistic revenue growth. By addressing the challenge of poor visibility, companies can expect substantial improvements in operational efficiency, cost reductions, and overall customer satisfaction.
Embracing AI in the supply chain is not just a technological advancement but a fundamental shift towards a more responsive, agile, and profitable business model. For more information, please write hello@felixsolutions.ai.