Top Performers Investing in, Benefitting from AI

The rich get richer. According to research from Gartner, top-performing supply chains are investing in artificial intelligence and machine learning at twice the rate of their lower-performing peers. Those same firms are also able to leverage their size to utilize productivity as a focal point for sustaining business momentum over the next three years. Conversely, lower-performing companies are more likely to utilize efficiency or cost savings.

"Top-performing supply chain organizations make investment decisions with a different lens than their lower-performing peers," said Ken Chadwick, VP analyst in Gartner's Supply Chain Practice. "Enhancing productivity is the key factor that will drive future success and the key to unlocking that productivity lies in leveraging intangible assets. We see this divide especially in the digital domain where the best organizations are far ahead in optimizing their supply chain data with AI/ML applications to unlock value."

Gartner surveyed 818 supply chain practitioners across geography and industry from August through October 2023. Organizations were scored across five key metrics measuring business and people outcomes to determine their performance level. High performers were defined as those organizations that exceeded expectations over the past 12 months across the five measurements.

When it comes to the processes using AI/ML, 40% of high performers are using AI/ML in demand forecasting, versus just 19% of low performers. The same holds true across the remaining four metrics. The performance:

• Order management and fulfillment: 33% vs. 8%
• Supply planning: 31% vs. 12%
• Logistics and distribution: 27% vs. 8%
• Sales and operations planning/integrated business planning: 24% vs. 10%

Of the respondents, 119 were identified as high performers while 569 were considered low performers.

Gartner observed that the difference in high and low performers also impacts strategy. Top performers are more likely to prioritize extracting value from digital assets to drive productivity, whereas lower performers make digital investments to achieve efficiencies such as cost savings.

Among the top-five digital investments expected to deliver value, high performers are farther along in implementation. These include (high performing vs. low performing organizations):

• Partner with IT to establish unbreachable data security mechanisms: 74% vs. 61%
• Create ethical and binding data privacy frameworks for use of customer data: 68% vs. 50%
• Write cybersecurity measures into supplier and staff contracts: 66% vs. 57%
• Capture supply chain-specific customer satisfaction data: 58% vs. 40%
• Analyze and leverage supply chain-specific customer use and satisfaction data: 57% vs. 35%

"Capturing, protecting and then leveraging an organization's data through the use of AI/ML is an example of how organizations are increasingly turning towards intangible assets to extract new sources of value," said Chadwick. "High-performing organizations are moving beyond the initial implementation stage to full adoption, resulting in better decision making that unlocks new sources of value."

The report, Supply Chain Executive Report: Future of Supply Chain 2024, is available to Gartner clients. For nonclients, Gartner has produced an on-demand webinar: The Future of Supply Chain: Redefine Business Value for 2024 & Beyond.

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