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How much do retailers use AI in the supply chain?

Most retailers are not utilizing AI in the supply chain.

A new survey reveals the level of penetration artificial intelligence (AI) has in different areas of the retail supply chain.

Released by Blue Yonder, “Are Retailers Prepared for the AI Era” indicates that aurveyed retail executives are not deploying AI in their supply chains n great numbers. Fewer than half (48%) apply AI to fulfillment optimization, the supply chain workflow most frequently optimized with AI.

Following are labor scheduling and workforce optimization (45%), demand forecasting (42%), and inventory placement (42%). Respondents indicated even lower levels of AI usage for the following supply chain tasks:

  • Markdown predictions and avoidance (26%).
  • Inventory optimization via keeping dynamic safety stock up to date (18%).
  • Improving accuracy of estimated ship dates (16%).
  • Improving order picking accuracy (7%).

The survey also showed that respondents cite inaccurate inventory counts as the number one cause of poor customer experience.  

Barriers to AI adoption

The biggest barriers to AI adoption in respondent organizations include:

  • 45%: Security risks
  • 42%: Budget limitations
  • 41%: Lack of trust in output or recommendations
  • 39%: Talent limitations (skill, availability, etc.)
  • 37%: Lack of organizational strategy or clear use case
  • 26%: Lack of clean unified data/complex data environments
  • 25%: Lack of organizational knowledge

Other findings from the report include:

  • 96% of respondents have made further AI adoption a priority going forward.
  • 95% say they are already using AI technology in at least one application.
  • 85% say they are extremely or very knowledgeable about AI.
  • 85% say they have no hesitations about applying AI to their business operations.

[Read more: Survey reveals how retailers view AI, future deployment plans]

“Today, there is a proliferation of AI solutions available to retailers, but understanding general technology concepts is not the same thing as knowing which AI-enabled product or service is best suited for individual retailing needs,” said Srinivas Pujari, corporate VP, Blue Yonder. “Retailers who are innovating with AI will leave their competitors behind, especially those who deploy the most efficient solutions that best meet their customer needs. Retail executives cannot afford to be overconfident in their AI strategy.”

The survey, conducted in partnership with a third-party company, polled 150 retail executives in August 2023 through an online, invitation-only survey. Among respondents, 2% work in companies with annual revenue of $250 million to $500 million; 22%, $500 million to $1 billion; 67%, $1 billion to $10 billion; and 9%, more than $10 billion. Respondents were Director level and above, with 22% being C-suite level. And about half were grocery retailers (49%), with the rest being hardline retailers (36%) and softline retailers (15%).

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