Generative AI

The role of generative AI in demand forecasting for optimising supply chain

Every day, technological revolutions are transforming the way businesses operate, and generative AI has been the revolutionary force reshaping the way businesses manage their operations. Supply chain management is no exception, with businesses seeking the help of AI to transform and optimise their supply chains for the fast-paced digital world. Integrating generative AI and supply chain management is not only making supply chains more efficient but also facilitating quick data-driven decisions for optimal resource utilisation.

Generative AI in supply chain management today

Supply chain management is an integral part of any business, ensuring a smooth flow of goods and services from the manufacturer to the end user. As a result, effective supply chain management is a fundamental strategic element for any business that wants to succeed. However, in today’s dynamic market, businesses have to overcome the challenges of increasing customer expectations, managing risks and disruptions, and balancing costs and sustainability to ensure optimal supply chain management.

Generative AI tools can help overcome these challenges and effectively manage the increasingly complex supply chains. 43% of companies believe embracing generative AI in inventory management and supply chain optimisation can benefit them. And with AI use cases encompassing:

• Demand forecasting
• Supply chain planning
• Inventory optimisation
• Supplier relationship management
• Predictive maintenance
• Logistics improvement
• Fraud detection
• Product designing
• Sustainable and ethical sourcing
• Financial optimisation

The global AI in supply chain management market is set to reach USD 12,941.14 million by 2032, growing at a CAGR of 45.62% during 2023-2032.

Role of generative AI in inventory management and demand forecasting 200

Leveraging generative AI for demand forecasting involves an analysis of historical sales data, emerging market trends, and any other relevant factors to predict future demand. Generative AI lets you explore various demand scenarios to assess the impact different factors might have on the demand levels and offer insights to facilitate data-driven decision-making. Considering different factors at once, generative AI models can help identify complex patterns in the data that traditional forecasting models or manual forecasting would miss. As a result, businesses can expect changes in demand, adjust their production and inventory levels, and stay ahead of any disruptions that can impact their supply chain.

Once you leverage AI for demand forecasting, you can optimise your inventory levels, minimising the risk of a stockout while reducing unnecessary inventory levels to optimise your costs and improve customer satisfaction. Generative AI in inventory management can help you factor in lead times, supplier capabilities, and demand fluctuations when maintaining the right inventory balance. As a result, you can stay on top of the fluctuating demands, prevent over or understocking, optimise inventory carrying costs, and facilitate an agile supply chain.

How is generative AI optimising modern supply chains?

Although traditional AI tools have been effective in optimising supply chains in the past, they often fall short of meeting the mark when it comes to managing supply chains in highly disruptive and dynamic market conditions today. Here is how generative AI is helping tackle this challenge:

• Generative AI ventures outside the predefined parameters of traditional AI to tackle any unforeseen supply chain challenges, making it valuable in navigating a dynamic and complex supply chain landscape.
• Generative AI excels at recognising complex and intricate patterns in data, which can be valuable when analysing multifaceted supply chain information and facilitating well-informed decision-making.
• Contrary to traditional AI, which relies on historical data, generative AI has a higher degree of adaptability, processing real-time information to track ever-changing supply chain conditions, respond to unforeseen challenges, and facilitate agile decision-making.
• Generative AI can overcome the data scarcity challenge by leveraging unsupervised learning techniques and generating new data where data availability may be limited.
• Generative AI in supply chain management can handle the complexity of solving multiple inter-connected problems simultaneously for more holistic solutions.
• Generative AI focuses on exploration rather than exploitation, leading to innovative solutions, breakthroughs, and novel opportunities for supply chain optimisation.

And leveraging generative AI to tackle challenges of modern supply chain management can offer benefits, including:

• Improved demand forecasting and inventory management
• Enhanced customer satisfaction
• Reduced operational costs
• Increased productivity and efficiency
• Improved risk management and compliance

How can Infosys BPM help?

Generative AI for business has the potential to transform business operations and accelerate value creation. Infosys BPM's AI-first platform can help you not only reimagine your business operations but also take an AI-first digital approach while reinforcing AI ethics to optimise them. No matter the industry, Infosys BPM can help you transform business processes and insights to leverage AI to optimise supply chain management.