New Research: Supply Chain Professionals View AI as a Key Tool To Drive Innovation, yet Only 24% of Companies Have Integrated AI Into Operations

May 22, 2024 at 11:00 AM EDT

Research from Inspectorio reveals AI’s potential to propel supply chain efficiencies, sustainability efforts, and ensure regulatory compliance despite limited use by companies today

Inspectorio, the leading global supply chain platform for sourcing, sustainability, compliance, and quality, today announced findings in an extensive report, “The State of the Supply Chain,” which explores the challenges that brands, retailers, and suppliers face in a changing economic and regulatory landscape.

Respondents highlighted the importance of understanding the impact of modern technologies in solving problems of scale and engagement in the supply chain, despite barriers that exist to full adoption of these solutions. Drawing on survey responses and expert interviews across industries, the report highlights technology’s role in enhancing transparency and efficiency, the growing importance of sustainable practices, the influence of regulatory changes, and the financial dynamics affecting supply chains globally.

Artificial intelligence drives increased efficiency despite lacking widespread adoption

The survey found that 82% of supply chain professionals indicate technology advancements will have a significant impact on the supply chain over the next five years. Specifically, innovations in AI and machine learning have led to notable advancements in quality assurance, predictive analytics, and operational efficiency, supporting improved decision-making and transparency.

Despite this, 77% of respondents indicated that AI is not yet integrated into their supply chains. The current lack of AI-powered tools was cited by 47% of respondents as the primary barrier, highlighting a significant gap in the market for industry-specific AI solutions. Restrictive IT policies were cited as the second largest barrier to adoption (22%).

Unsurprisingly, the report found that companies utilizing AI tools in their supply chains consistently rate the impact of the technology more highly. AI-embracing retailers and brands position themselves as leaders as they actively shape the future of supply chain management, setting the pace for innovation across the sector.

Technology innovation helps close sustainability gap between retailers and factories

Currently, only 25% of respondents view sustainability as a pivotal area for future innovation, indicating that recent advancements have not yet penetrated the broader industry. Amid a landscape still dominated by traditional practices, the potential for significant disruption exists as sector-specific technologies mature.

As early adopters of sustainability and transparency measures, brands and retailers are spearheading leveraging technology to enhance customer engagement and improve product traceability. Meanwhile, factories and suppliers are prioritizing AI to enhance operational efficiencies.

This disconnect underscores the different strategic priorities between retailers and factories in their innovation efforts. While only 14% of respondents currently see consumer demand for transparency and ethical standards as a significant trend influencing sustainability, AI has the chance to act as a catalyst for a forthcoming shift towards more widespread sustainable practices throughout the supply chain.

Companies are managing supply chain risk and regulatory compliance through supplier diversification and technology advancements

Driven by escalating regulatory compliance, 93% of survey respondents indicated that compliance budgets have remained the same or increased over the past two years. Additionally, 65% of respondents rate recent regulatory changes as significant, affecting both operational and compliance strategies.

With risk management, compliance pressures, and budget constraints rated as the primary challenges facing the industry, many professionals are managing risk through supplier diversification, enabled by technology advancements. Diversifying supplier bases not only addresses compliance pressures and budget constraints, but it also acts as a pivotal strategy for risk mitigation.

The strategic use of technology and diversification is described in the report as essential in navigating the complexities of modern supply chains, allowing businesses to better respond to unpredictable challenges while maintaining high standards of quality and operational scalability.

“As evidenced in the report, conflicting priorities exist between increasing operational efficiency and spearheading sustainability and traceability efforts at various points along the production chain,” said Chirag Patel, CEO, Inspectorio. “The current lack of AI adoption throughout operations highlights the need for tailored solutions to create an effective roadmap to navigate a dynamic and evolving supply chain.”

To learn more and access the full report, visit: www.inspectorio.com/state-of-supply-chain-report-2024.

Survey Methodology

Inspectorio surveyed 144 professionals throughout the supply chain industry, including experts, professors, on-the-field personnel, executives and workers to ensure a diverse set of perspectives. The distribution of respondents by industry is as follows: Apparel & Footwear (56%), Home & Furniture (12%), Food & Beverage (6%), Multi-Category Retail (6%), Outdoor & Sports (1%) and Other (18%). The breakdown of respondents by organization type is as follows: Factory (44%), Brand (22%), Supplier (19%), Retailer (13%) and Other (2%).

About Inspectorio

Inspectorio is the leading AI-powered supply chain platform optimizing performance, building resilience, and providing intelligence across production chains for global brands, retailers, and their multi-tier suppliers.

Our innovative platform seamlessly connects and digitizes supply chain processes to optimize decision-making, while providing real-time visibility and control over production chain operations.