**London**: March marks Asset Management Awareness Month, recognising supply chains as vital assets. A CEOWORLD Magazine article highlights AI’s potential in overcoming supply chain challenges, enhancing resilience, and optimising vendor relationships,amidst a backdrop of industry disruptions and financial losses exacerbated by COVID-19.
March is celebrated as Asset Management Awareness Month, highlighting the critical significance of supply chains as vital assets for many organisations. The recent article from CEOWORLD Magazine underscores the transformative potential of artificial intelligence (AI) in enhancing supply chain management, particularly in the wake of challenges exacerbated by the COVID pandemic.
The analogy presented likens a supply chain to a classroom environment during a test. Just as external disruptions can impact students’ performance, supply chain disruptions can have dire financial consequences, with a staggering cost estimated at $82 million per day. The article reveals that an overwhelming majority—nine out of ten—of industry professionals experienced significant supply chain issues in 2024, prompting 93% of executives to reconsider their supply chain management strategies.
AI is identified as a pivotal tool in addressing these challenges. Various strategies are outlined to illustrate how AI can mitigate risk and bolster resilience in supply chains. One key benefit of AI is its ability to continuously evaluate risks across multiple dimensions such as cybersecurity and compliance with evolving regulations. Despite the recognized importance of supply chain resilience, it is reported that only about 6% of firms achieve comprehensive visibility across their operations, adding that 86% of executives believe in the necessity of investing more in advanced technology for enhanced monitoring.
AI’s role extends to managing tail spend—off-contract transactions that can significantly drain a company’s resources. Estimates suggest that tail spend can lead to losses of approximately 16% in negotiated savings. The incorporation of AI has been noted to successfully curb such spending, as demonstrated by a major corporation in the Fast-Moving Consumer Goods sector, which reportedly mitigated over $80 million in rogue spending through AI integration.
Furthermore, the COVID pandemic has underscored the importance of supply chain diversification. AI’s capabilities allow organisations to pinpoint optimal diversification opportunities, enhancing overall stability and return on investment (ROI). A collaboration between AI experts and a global beverage company resulted in an eight per cent increase in ROI following a diversification strategy.
In addition to diversification, the article discusses the significance of preparing for heightened regulatory reporting, particularly in high-income and middle-income countries where regulatory standards continue to become more stringent. AI tools are highlighted as beneficial for improving data quality and compliance with sustainability and equity standards in the supply chain.
Lastly, AI facilitates vendor rationalisation, optimising organisations’ supplier relationships and potentially leading to substantial cost savings. The article cites Procter & Gamble’s strategy of drastically reducing its agency partnerships and stock-keeping units, which inspired a broader trend towards vendor consolidation industry-wide. A notable example provided is an oil and gas company, which benefited from AI-driven vendor optimisation, realising savings of $68 million.
In conclusion, the integration of AI into supply chain management presents various strategies to enhance resilience and mitigate the multitude of risks associated with supply chains, which have become increasingly critical in today’s dynamic market environment.
Source: Noah Wire Services
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