Why the Booming E-Commerce Industry Calls for AI-Driven Supply Chain Management

The COVID-19 pandemic supercharged the growth of online shopping, with e-commerce sales skyrocketing.

E-commerce made up 21% of all retail sales in 2020 in the U.S., a huge jump from just 15% the year before. The e-commerce boom is projected to continue with retail e-commerce sales worldwide expected to grow to 7.4 trillion USD by 2025.

How are you preparing your e-commerce supply chain for this explosion in consumer demand, especially for the holiday season sales?

First, let’s tackle the current challenges.

Outdated Forecasting Missing Customer Demand Shifts

One huge supply chain headache is inaccurate demand forecasting.

Relying solely on past sales data means missing shifts in what customers want to buy now. It leads to shortages or getting stuck with too much of the wrong inventory.

Supply chains need agile, real-time demand sensing.

AI-powered solutions tap into website analytics, search trends, and social media chatter. This data reveals minute-by-minute changes in customer interests.

With AI demand sensing, supply chains can spot emerging trends fast. It enables accurate demand forecasts to match inventory and production with what customers want today.

Inventory Management Misses Real-Time Market Needs

Poor inventory management compounds forecasting issues.

Without real-time visibility, supply chains easily overstock or face stockouts.

Excess inventory ties up cash while stockouts frustrate customers and sink sales.

AI-driven inventory optimization uses machine learning algorithms.

By analyzing past sales, promotions, pricing, trends, and competitive activity, AI models rapidly adapt inventory planning. This cuts the risk of overstocks or shortages even as market conditions change.

Also read: 3 Essential Click-to-Deliver Capabilities for Retailers to Succeed in E-commerce

Supply Chain Visibility Gaps Lead to Costly Disruptions

Many supply chains lack end-to-end visibility across their partners. This slows identifying and tackling issues. It also causes delays in delivering solutions. Say a supplier warehouse has a robotics malfunction and can't fulfill orders. Without visibility, retailers might not know for days, leading to lost sales.

AI predictive analytics and IoT sensors provide complete visibility across the supply network.

Supply chain partners can spot disruptions in real-time. They can quickly coordinate alternate suppliers, transportation, or inventory rerouting. This agility minimizes costs and customer impact.

Inflexible Warehouses and Logistics Can’t Absorb Volatility

Many supply chains still rely on warehouses and logistics designed for traditional retail.

But e-commerce requires greater speed, efficiency, transparency and flexibility. Online order surges, returns, direct shipping, and fast delivery times stress legacy facilities.

AI transforms warehouse operations to handle e-commerce volatility.

Automated picking, packing and inventory management boosts fulfillment efficiency. Robots enable 24/7 operation, adding capacity and flexibility.

Machine learning optimizes warehouse layouts and workflows. AI also enables dynamic delivery routing, mode selection, and demand-aware distribution strategies. This optimizes logistics costs and service levels.

Bring the Agility and Efficiency of AI into E-commerce Supply Chains

E-commerce requires supply chains to be agile, efficient, and transparent. AI delivers the capabilities for success in online retail:

• Real-time demand sensing for inventory planning
• Automated inventory optimization through machine learning
• End-to-end visibility for swift issue resolution
• Intelligent, robotic warehouses to absorb volatility
• Flexible logistics and distribution strategies

Leading retailers are already using AI to ride the e-commerce wave.

Supply chain leaders that transform their operations with AI will thrive in the era of digital commerce. Those clinging to outdated practices face rough waters ahead.

Learn how GEP uses AI-first approach to optimize your e-commerce supply chain.