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How AI Innovation Transforms Supply Chain Planning

Business leaders that anticipate market demand opportunities or risks -- and then respond quickly in a dynamic way -- will gain a significant competitive advantage. Today, agility is a key benefit of a modern supply chain.

Global revenue from demand planning applications will generate over $8 billion by 2025, as Artificial Intelligence (AI) capabilities offered by forward-thinking IT vendors and service providers continue to improve data-driven supply chain transformation.

Supply Chain AI Market Development

According to the latest worldwide market study by ABI Research, the growing e-commerce sector and the need for supply chain AI solutions in the Asian market are also responsible for this forecasted growth.

With the volume and variety of valuable data proliferating inside and outside the typical enterprise, AI and machine learning capabilities are becoming integral to successful supply chain planning.

Only with these cognitive computing technologies can companies leverage demand sensing, which uncovers the hidden relationships between hundreds of demand drivers and their effect on actual product sales.

As AI technologies and machine learning models become increasingly sophisticated and enterprises get better at collecting complex data, demand sensing capabilities, and therefore supply chain efficiency, will improve further.

"It is becoming vital for enterprises to understand how product demand is impacted by continual shifts that occur internally in the supply chain and externally in the market," said Nick Finill, senior analyst at ABI Research.

The need for more advanced, machine learning-based demand sensing capabilities means that complex data from outside of the enterprise is very valuable. Relying exclusively on internal data, such as historical sales figures, is no longer enough in the current climate of global supply chains.

Being able to digest and analyze structured and unstructured data from the external market -- such as weather data, social media posts, and economic indicators -- will become a critical need as global supply chains transform.

Demand planning software vendors are playing a crucial role in driving innovation and a more demand-driven approach to business planning within the supply chain. Savvy vendors in this space are creating compelling products and services for companies in need of external technical expertise.

Outlook for Supply Chain AI Applications

"Forecasting demand is only half of the equation, however," said Finill. "Companies must understand how to effectively execute demand-driven planning and involve the entire business in a coordinated, holistic response that maximizes profitability for the wider enterprise."

According to the ABI assessment, companies that can make value-based operational decisions driven by reliable demand sensing capabilities will have a compelling advantage over those that can’t.

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