AI Not a Priority for Retailers and CPG Companies

A new study by RELEX Solutions shows that 57% of retailers and CPG firms plan to invest in predictive and generative AI. However, AI and ML rank fifth in importance for technology spending, behind boosting e-commerce, better inventory management, and improving demand forecasting and data analytics. This suggests that despite its widespread benefits, companies still don't recognize AI's potential to manage shifts in consumer demand.

The RELEX State of Supply Chain 2024 Report highlights the challenges, investments, and opportunities for retailers and CPGs in the next 3-5 years. It points out the top threats to supply chain efficiency: changing consumer demand (55%), global events (50%), and wrong forecasts (43%). Also, 94% felt the impact of social media on demand prediction.

The report comes on the heels of a Coresight Research and Simbe Robotics study about the important role AI will play in the future of retail, and a similar finding for the manufacturing industry.

Retailers are adapting their supply chains to meet changing consumer needs, channel shifts, and disruptions. They are focusing on real-time inventory visibility, customer demand sensing, and inventory optimization tools. Additionally, most are expanding omni-channel options and seeking more suppliers for sourcing redundancy.

CPGs are working to balance volatile demands and tight retail collaboration. They face challenges in planning and managing supply variability. For solutions, CPGs are adjusting inventory and production strategies. This includes monitoring demand signals, keeping safety stock, and improving inventory turnover.

“The retail and CPG industries continue to face complex, global challenges that require actionable insights to accurately predict, anticipate, and manage consumer demand,” said RELEX Vice-President of Strategy & Marketing Laurence Brenig-Jones. “To thrive in this new reality, companies must fundamentally transform their approach to supply chain management by breaking down silos, embracing new technologies like AI and ML, and fostering a culture of collaboration and agility. The winners will be those that can achieve resilience and flexibility, to sense and respond to disruptions and opportunities in real-time, and continuously adapt their strategies in the face of change. With the right mindset, tools, and partners, retailers and CPGs can build the supply chains of the future and unlock new levels of growth and profitability.” 

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