AI is everywhere: on that, everyone can agree. What no one can quite agree on is what that actually means. The supply chain field is likely to see some major ripple effects as new iterations of the technology take hold; in fact, those impacts are already starting. At GESG, we’re always keeping a close eye on the latest developments and predictions so we can provide the best possible advice to our clients.
McKinsey’s recent Global Survey on AI revealed a number of insights on how today’s organizations are using AI and related technology, what they think about it, and what the future might look like. Here are three key takeaways for the supply chain and logistics world:
AI’s impact varies by sector.
In McKinsey’s research, just 7% of respondents across all surveyed industries said they currently use AI in their supply chain operations. However, that number is significantly higher in certain areas. In the tech sector, it’s 10%; in consumer goods and retail, it’s 14%, and in advanced industries, AI usage in supply chain hits 15%. In contrast, just 2% of healthcare leaders and 3% in media reported using AI for supply chain functions.
As AI adoption spreads, these numbers are likely to rise. For now, however, the divide evident in this survey points to the industries where forward-thinking supply chain and logistics leaders are currently most in demand. The leaders who excel will pair industry-specific expertise with supply chain knowledge and a strategy for leveraging today’s advanced technologies to streamline operations and create value.
AI can have a positive cost impact – if used effectively.
In the first half of 2024, just 53% of organizations saw revenue increases due to use of AI in supply chain operations. By the latter half of the year, that number spiked to 67%, driven largely by those who saw business unit revenue increases of 10% or more (jumping from 5% to 19% of organizations). Likewise, just 46% reported supply chain cost reductions in the first half of the year, but by the end of the year, 61% said they saw cost reductions thanks to AI implementation — the highest of any business unit.
The key to these financial benefits, of course, is effective use of AI. Simply tossing some ChatGPT prompts into the process and calling it a day is not likely to have a significant positive impact—it could even have a negative one. Instead, organizations are seeking leaders with real vision on how to use AI in specific, smart, and thoughtful ways to reduce costs, improve efficiencies, and streamline operations – all of which lead to better ROI.
No one is sure about job impacts.
Everyone has an opinion as to whether AI implementation will lead to job losses, job creations, or not have much of an impact at all. McKinsey’s survey bears that out. 47% of respondents think AI will lead to a decrease in jobs, 38% think there will actually be an increase, and 15% predict no significant change. While supply chain is one of the fields with the highest level of “headcount decrease” predictions, the numbers indicate a great deal of uncertainty.
Dealing with that uncertainty, then, must be a top priority for supply chain and logistics leaders. Organizations will need to seek out leaders who are not only knowledgeable about the nuts-and-bolts of the supply chain world, but who have experience managing change and mitigating risks.
Looking for a transformative supply chain leader to guide your organization through AI-driven changes? GESG is here to help. Contact us to learn more about our recruiting solutions and how we go above and beyond to ensure you have the talent you need to meet this moment and to drive long-term growth and goals.