How AI Helps Predict Supply Chain Problems Before They Happen
In the past couple of years, consumers have witnessed everything from bare shelves at stores to missed deliveries and surprise price increases. From toilet paper in 2020 to automobile parts in 2023, supply chain issues have dominated headlines. But quietly, businesses are now employing a new trick to remain one step ahead of the mayhem, and that trick is AI.
Yes, AI is now being used in intelligent ways to forecast supply chain issues before they occur. And one of the ways it’s accomplishing that is by using something known as predictive procurement. It sounds technical, but don’t worry, it’s simply a fancy term for saying AI is assisting businesses in making improved purchasing decisions by analyzing patterns, data, and previous issues.
Let us break it down.
What Actually is Predictive Procurement?
Each time a company purchases raw materials, carries inventory, or interacts with suppliers, there’s plenty of planning that goes into it. But here’s the problem: that planning typically takes into account what’s happened before, not what might go wrong in the future. That’s where predictive procurement comes in.
With predictive procurement, artificial intelligence considers an enormous amount of data — not only historical orders and delivery histories, but weather fluctuations, political developments, the price of fuel, and even social media trends. And it then applies all that information to determine whether there is a risk of something going wrong in the future.
It’s like having a super smart assistant who reads the news, checks the weather, listens to market chatter, and tells you, “Hey, better order this part early, there might be a shortage next month.”
Why is This a Game-Changer?
In the past, companies usually discovered they had supply issues after they’d already begun. Perhaps a shipment was caught up in a port, or perhaps a supplier had shut down. By that point, it was too late to prevent delays.
But now, AI can warn about these potential problems before they become an issue. That means businesses can react early, such as by identifying a new supplier, preordering more stock ahead of time, or changing their delivery schedules.
The outcome? Fewer disruptions, improved prices, and more consistent service for customers.
How Does AI Know What Might Go Wrong?
Imagine AI as a person who never sleeps and always observes everything that can influence supply chains. It learns about patterns in data, such as how frequently some supplier is late or which months are the worst for storms in a given area.
If there is a strike at a big shipping hub in Asia, the AI may alert that as a threat to businesses that depend on products from there. If gas prices are climbing quickly, it may recommend purchasing items ahead of time before transport costs increase.
It’s not wizardry, it’s simply clever use of information. And companies are beginning to believe these forecasts because they’re frequently correct.
What Are the Benefits in the Real World?
Businesses in the US and globally are already beginning to realize the ways in which predictive procurement can assist.
For instance, in the recent shortage of semiconductors, some technology businesses using AI platforms were able to change suppliers prior to the shortage increasing. This allowed them to continue producing goods while their rivals were left idle.
In the world of retail, there were some retailers who skipped over bare shelves last holiday season through the use of AI to gauge what would sell most,and what might fall behind. They placed orders in advance, and it worked to their advantage.
And for smaller businesses, the software can be a lifesaver. It helps prevent expensive mistakes and makes the owners more self-assured with their choices.
Is This Only for Big Companies?
Not any longer. Some years ago, this type of technology was only accessible to large corporations with large budgets. But times are rapidly changing. Today, numerous software platforms provide cost-effective AI tools that even small and mid-sized businesses can avail themselves of.
The best part is, these tools are also becoming easier to use. Business owners don’t have to be technology gurus. They simply need to know what they want to monitor, and the system takes care of the rest.
What’s Next for Predictive Procurement?
As artificial intelligence continues to get smarter and smarter, predictive procurement will get ever more accurate and ever more beneficial. Eventually, these applications could be capable of recommending not only what and when to procure, but even where to procure from, depending on ethical processes, sustainability, and so forth.
And with global pressures such as climate change, political realignments, and continuing economic ebb and flow, supply chain planning is no longer merely about cost. It’s about being ready, being nimble, and making wise decisions quickly.
That’s where AI truly excels.
Supply chain disruptions aren’t disappearing anytime soon. But today, thanks to the power of AI and predictive procurement, companies no longer have to be blindsided. They can move early, prevent losses, and keep things humming along, even when the world seems to be unpredictable.
And for anyone who owns a business, big or small, that kind of peace of mind is invaluable.
