How AI in Supply Chain Management is Transforming Business

Supply chains are vast, sprawling networks that can include multiple vendors and logistics partners. Careful planning is essential for reducing or removing bottlenecks that can negatively impact things like:

• Production times
• Delivery rates
• Warehouse layouts
• Order quantities
• Business profits

Artificial intelligence (AI) technology shows great promise in its ability to streamline supply chain operations, improve decision-making, and reduce the potential for lost profits or damaged goods.

The Current State of AI Use in Supply Chain Management

A McKinsey & Company report found that 95% of distributors are already exploring how they can best integrate AI into global supply chain operations. But far fewer are actually at the point where they’re successfully using the tech.

One of the biggest roadblocks to adoption is finding the right talent for the job. Ironically, though, AI advancements in the supply chain can make it easier for distributors to find and retain employees. Using AI in this way can ultimately save distributors up to 20% in hiring costs.

But there are other barriers at play, too, and they aren’t limited to the supply chain sector.

Our recent AI Workforce Report found that 50.11% of workers across industries aren’t getting AI training and support from their employers. So even if AI technologies are available at the office, many workers aren’t sure how to best use the tools.

How Can AI Improve the Supply Chain?

Our report also found that among workers who are using AI successfully at work, more than 79% see “significant” or “somewhat” increased productivity.

McKinsey notes that within a distribution environment, these gains can directly relate to:

• Up to 30% less inventory kept on hand
• Up to 15% less procurement spend
• Up to a 20% reduction in logistics costs

Let’s take a closer look at how the productivity and operational benefits of AI can play out in the supply chain world.

Supply Chain Planning

We live in a world where product trends can take off overnight on social media. Brands must keep up with accurate demand planning if they want to maintain their profit margins and avoid shortages or overstock situations.

The buyers and suppliers of retail products can leverage AI to continually monitor for spikes in interest around specific products, forecast potential inventory needs, and place orders.

This is particularly beneficial across the supply chain for products with a short lifecycle, like consumer beauty and tech. Consumers purchase these items more frequently than, say, a car—so their preferences can shift dramatically from month to month.

The MIT Sloan Management Review proposes that businesses use a “Human-AI Demand Forecasting Framework” that:

1. Primarily relies on AI to track and forecast consumer demand for personal care and lifestyle products
2. Uses mostly AI, with some human input, to track interest in consumer tech
3. Uses mostly humans, with some AI support, to forecast demand in specialty or regulated industries
4. Relies heavily on human experts to predict demand fluctuations for larger, long life cycle purchases

Tools like Exploding Topics can help you automate the process of researching and predicting trend fluctuations. We leverage machine learning to find, track, and forecast your audience’s changing interests.

Every trend graph includes both our forecasts and historical data, so you can get a better understanding of how interest changes over time.

Our Trending Products report is particularly useful when stocking or supplying an e-commerce company, too, as it includes information about average pricing, sales volumes, and customer reviews.

Inventory Management

Having access to accurate demand forecasts will help to keep you from ordering excess product or parts—but what about when you’re trying to account for stock already in a warehouse?

AI can help with this, too. The process combines both cloud-based, AI-driven computing and Internet of Things (IoT) connected sensors.

For example, a sensor embedded in warehouse shelves can sense changes in weight levels as products are removed.

You can feed real-time datasets, along with projected demand metrics, into a machine learning algorithm that adjusts quantity estimates and helps you avoid excessive restocks.

You can even leverage AI algorithms to analyze the layout of your warehouse, monitor which routes are traveled by workers the most, and optimize how you store your inventory for fewer trips back and forth.

Over time, such AI capabilities can help you to reduce excess spend, eliminate repetitive tasks, and cut down the time to retrieve and package goods.

Logistics and Transportation

AI optimization doesn’t end when packages are on the truck, either. Logistics companies are exploring how AI can enhance the end customer’s experience.

This may range from improving AI models that predict delivery times to launching generative AI chatbots that answer customer questions with no downtime.

DHL is a good example, as the company is currently implementing AI in some of their customer-facing operations. Visitors to the DHL site can engage with an AI-powered assistant called Aida to learn more about global forwarding services.

Supplier Relationship and Risk Management

AI can also help distributors and vendors improve the way they source inventory. We’re not talking about warehouse robots, either, though those do exist. More subtle uses of AI systems in supply chain relationship and risk management include:

• AI-powered contract review tools that make it easier to process and enact supplier agreements
• Tools like the Credo AI Vendor Portal that let you set vendor compliance requirements, collect documentation, and track policy adherence
• Machine learning algorithms that can continually analyze differences between projected and actual delivery times, damaged inventory levels, and more

A human presence is still vital when dealing in matters related to stakeholders and supplier performance, but AI can make processing and analyzing vast amounts of data much easier.

What’s Next for AI Powered Supply Chain Management

We’re seeing a notable increase in interest around specific supply chain and AI topics. If you’re interested in continuing to optimize your supply chain with the help of machine learning, keep an eye on these trends and tools:

Supply chain analytics

Supply chain analytics refers to all the various data-driven tools and techniques, including AI solutions, that can be used to:

• Predict customer demand
• Improve operational efficiency
• Minimize supply chain disruptions
• Optimize warehouse management
• Streamline product sourcing or distribution
• Align production schedules
• Reduce supply chain risk

Interest in this topic has grown 257% over the past five years, and we expect monthly Google searches for the term to jump from 12,100 to 45,800 by Q3 2026.

If you’re not already thinking about how to optimize your supply chain analytics, it’s time to start—because your competitors are already planning their next move.

Sell The Trend

Sell The Trend is an AI-enabled dropshipping platform that helps e-commerce businesses identify market trends and find viral products to sell without taking on any additional inventory.

Interest in the platform is taking off rapidly, and we expect Google searches for Sell The Trend to be over 65,000 per month in less than a year.

AI Mapping

While AI mapping can have uses across a variety of industries, it’s one way to better plan and organize the storage or distribution of products. We’re seeing interest in AI mapping grow through the supply chain sector; searches are expected to spike to 76,500 per month by summer 2026.

Stay Ahead of Supply Chain Innovation With Exploding Topics

Whether you want to stay on top of the latest distribution and warehousing advancements or are always keeping an eye out for the next hot product to stock, Exploding Topics is a great resource.

Weekly trend report emails, easy-to-read charts, a searchable database, and product pricing information all make Exploding Topics my go-to-resource for what's popular now—and what will be hot next. Plus, it's often the first place I learn about new AI tools and technologies that can make everything from inventory planning to marketing much easier.

Give it a try yourself and see how much you can learn—Exploding Topics' seven-day free trial gives you plenty of time to explore everything we offer.