Digital Climb

Supply chain directors seem to be struggling to claim their share of available artificial intelligence (AI) budgets. Despite – or perhaps because of – the current struggling economy, executives have freed up budgets for AI, especially the popular variant generative AI (GenAI), e.g. ChatGPT and Microsoft Copilot. According to a recent global survey by Tata Consultancy Services, 51% of Dutch chief executive officers (CEOs) are looking to artificial intelligence for innovation and revenue growth; in Europe, the figure is as high as 66%.

Analyst firm Gartner reported early this year that half of supply chain leaders plan to implement GenAI in the next 12 months. So I guess the wish is the father of the thought. From my many conversations with supply chain executives, I know that they are still eagerly searching for a good application for GenAI. In fact, according to Gartner, 14% are already in an implementation phase, although I have my doubts about this.

Our own recent research among 60 Dutch supply chain directors shows that ‘business transformation and digitization’ is near the top of the board’s priority list at 55%, just after ‘operational excellence and cost savings’ at 57%. The question is, however, how companies should negotiate this intended mountain of digitalization.

Structured approach
I recently tested a structured approach for this in a workshop with a number of supply chain executives from multinationals, with a positive outcome. The base camp of the digital climb is the assessment of the pain points in the end-to-end supply chain. Camp 1 is where the business strategy and the supply chain challenges are aligned; the choice of hooks or ‘pitons’, in mountaineering jargon.

Checking the right data and available IT tools – i.e. the ‘climbing equipment’ – is done in camp 2. It is not until camp 3 that the company should look at the need for new tools like GenAI and how they are successfully being used at other companies. Camp 4 is where preparations are made for the final stage to the summit: the go-live of the application.

Many-headed monsters
Because supply chains are complex many-headed monsters, pitching for an AI budget is tricky. However, visualizing the digital mountain avoids unrealistic expectations of AI.

Martijn Lofvers, Co-founder Supply Chain Companions