GenAI’s role in advancing supply chain planning

By Jan Snoeckx, director analyst, Gartner Supply Chain

According to Gartner research, digital adoption in supply chain planning (SCP) is extremely low with only about 15% of planning organizations surveyed reporting that they have adoption rates of more than 75%. Additionally, nearly half indicated having one or more failed attempts when implementing digital planning. Despite significant investments being made on SCP transformation projects, many organizations today are not using technology solutions to their full potential.

Historically, organizations have prioritized getting the algorithms right in SCP solutions, concentrating on calculations and balancing of demand and supply end-to-end. While this is important, there’s been a tendency to overlook user experience (UX). This has led to a decrease in user adoption and lowered the value achieved by organizations.

We are starting to see some progress though with more attention being given to UX within the SCP technology market, driven in part by architecture updates including native Web user interface (UI) technologies. Generative AI (GenAI) in particular is now accelerating the greater focus on UX.

GenAI is one of the fastest growing technologies on several Gartner Hype Cycles—including the recently published 2024 Hype Cycle for Supply Chain Planning Technologies—due to the attention and investments from technology providers. However, it’s not only technology providers investing, but also companies beyond the technology sector looking into ways of leveraging GenAI across their organizations.

GenAI has a lot of potential in supply chain planning. It can be used in many different contexts and use cases to improve productivity, including:

• Strategy development: Creation of custom presentation and communication materials for various audiences, from the frontline to board level.
• Summarization: Generate summaries of strategic decisions made by other functions in the enterprise to inform planning decisions, as well as legislation including environmental, social and governance (ESG) regulations that may impact aspects of SCP.
• Classification of materials: GenAI has the capability to make distinctions between less important and very important supply chain alerts, insights, decision proposals and predictions all of which can have an impact on forward looking planning activities. 

While GenAI offers a lot of potential, SCP technology providers must resist the temptation to put too many eggs in one basket from an innovation standpoint. There are many other areas: having a unified data model, strong and explainable analytics, scenario planning capabilities and a flexible, intuitive user interface, among other things, that are also extremely important and must be prioritized.

Additionally, supply chain planning leaders should avoid thinking of GenAI as solely a “digital assistant.” Many technology providers today are classifying the technology that way, but this is too narrow of a view. To truly take advantage of this new technology, we must envision GenAI as an equal partner for planners, working with them shoulder-to-shoulder and driving higher-quality planning decisions and outcomes.

Cases where bi-directional learning can be applied are great examples of this collaboration model. Imagine, for instance, finished goods deployment planning being done by a GenAI agent that can answer questions from a production planner. Over time, the production planner can improve on aligning production orders with deployment limitations and the GenAI agent can become smarter based on the questions and decisions taken by the production planner.

You may be left wondering if your organization should be prioritizing GenAI. The simple answer is yes. The more important question to consider though is: Will GenAI save supply chain planning? The answer here is probably not.

We must keep pushing the envelope and think of new ways of using GenAI, especially within the area of UX. However, we shouldn’t make too many compromises on other important tools that also require attention and investment to make advancements in critical areas. It’s so easy to get mesmerized by new, shiny objects because they can seem like appealing ways to cut corners, which is indeed tempting in this fast-paced world.

GenAI can be a powerful SCP partner, but not at the expense of all the other tools we also need to adopt. The potential of this new technology is significant. As with any new technology, consideration should be given to the unique application for your organization and adoption of GenAI should be part of your digital strategy, but not the sole strategy.

Join Gartner experts and supply chain planning leaders at the Gartner Supply Chain Planning Summit in Denver, CO on December 3-4 to learn more about this topic and other trends in supply chain planning.

About the author

Jan Snoeckx is a director, analyst in the Gartner Supply Chain Practice focused on Supply Chain strategy and planning.

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