3 days ago
AI May Be All Around Us, But Our Supply Chains Are Still Manual
Supply chains: a still-untapped AI frontier
Nothing is more vulnerable than supply chains – everything and anything can rock them without notice. Tariffs, weather events, political disruptions, economic issues, worker shortages, and epidemics will always disrupt even the smoothest-flowing chains. Let's not even get started on the 2020 Covid toilet-paper crisis. And we're seeing the potential pain Apple is facing with tariffs on its manufacturing operations in China.
Could self-managing, autonomous supply chains help companies rapidly adjust to such disruptions? Should they? A new survey of 1,000 C-suite executives out of Accenture says supply chains are the new untamed frontier for artificial intelligence.
'Today, companies operate their supply chains mostly manually,' the Accenture report's co-authors, Max Blanchet, Chris McDivitt, and Stephen Meyer, stated. 'Such supply chains aren't prepared to handle sudden disruption such as the recent tariff announcements.'
Of course, no AI can predict political actions or natural disasters. But it can play a role in making it easier to switch off one supply route and switch on another. At this time, few executives in the Accenture's survey currently have autonomy built into their supply chains – the average company's supply chain is only 21% autonomous. 'Few companies use AI to adjust sourcing strategies, reroute logistics and recalibrate inventory positions with minimal human intervention," the report states.
Only 25% of companies indicated that autonomous supply chains were a key priority for them. Only a very small fraction, four percent, aspired to reach full autonomy. Advancing autonomy in supply chains is 'held back by concerns like data privacy, poor data quality, immature processes, and low trust in AI.'
There are two tall orders for achieving greater autonomy in supply chains. First, start with shattering functional silos, the researchers advise. 'Autonomous decision-making requires unprecedented transparency across functions, processes and dependencies. Without end-to-end visibility, even the most sophisticated AI systems will fail to deliver meaningful value.'
Processes also need to be simplified. 'Companies that streamline operations and standardize processes will scale technology faster, adapt more quickly and accelerate AI learning cycles.'
We're likely not likely to see significant progress in supply-chain autonomy for at least 10 years, the researchers predict. By then, approximately 40% aspire to achieve a higher degree of autonomy where the system handles most operational decisions.
What does an autonomous AI-powered supply chain look like? Current automated systems "follow pre-set instructions and require human oversight – think of the cruise control function in a typical car," the Accenture team explained. 'Autonomous systems include a degree of automation but go beyond it. They are enabled by AI agents that make decisions and perform tasks without human intervention.'
Most executives agree that autonomous supply chains can deliver tangible advantages. Survey respondents expect a 5% increase in net income and 7% improvement in return on capital employed. Operationally, companies could slash order lead times by 27%, and boost productivity by 25%
Survey respondents believe autonomous supply chains to shorten the time it takes them to react to shocks by at least 62%, and recover from disruption 60% faster compared to today's existing networks.
The Accenture team advises business leaders to 'build solid data foundations through a secure digital core, which standardizes platforms and governance frameworks.' Companies should also 'invest strategically in AI-enabling technologies, starting with targeted pilots before scaling proven solutions.'
Most importantly, they need to 'restructure how people and technology collaborate, shifting human roles from routine execution to strategic guidance and oversight.'
