Multinationals turn to generative AI to manage supply chains

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Some of the world’s biggest companies are turning to artificial intelligence to navigate increasingly complex supply chains as they face the impact of geopolitical tensions and pressure to eliminate links to environmental and human rights abuses.

Unilever, Siemens and Maersk are among those using AI to negotiate contracts, find new suppliers, or help identify those connected to issues including the alleged repression of Uyghur Muslims in China’s Xinjiang region.

Although AI support in supply chain management has been used for years, the development of so-called generative AI technology has been offering more opportunities to further automate the process.

More multinationals have faced the need to keep abreast of their suppliers and customers amid disruptions during the Covid-19 pandemic as well as rising geopolitical tensions.

New supply chain laws in countries such as Germany, which require companies to monitor environmental and human rights issues in their supply chains, have driven interest and investment in the area.

Navneet Kapoor, chief technology officer at Maersk, said “things have changed dramatically over the past year with the advent of generative AI”, which can be used to build chatbots and other software that generates responses to human prompts.

In December, the world’s second-largest container shipping group helped provide $20mn in funding for Pactum, a San Francisco business that says its ChatGPT-like bot has been negotiating contracts with suppliers for Maersk, Walmart and distribution group Wesco.

“When there is war or Covid or supply chain disruption, you need to reach out to suppliers,” said Kaspar Korjus, Pactum’s co-founder, who said the start-up’s chatbot was negotiating deals worth up to $1mn on behalf of “tens” of Fortune 500 companies. “[With] one disruption after another these days, it takes humans too much time . . . Walmart don’t have time to reach out to tens of thousands of suppliers.”

Like other multinationals, Siemens, the German industrial conglomerate, has accelerated efforts to reduce its dependence on Chinese suppliers.

Since 2019, Siemens has employed the services of Scoutbee, a Berlin start-up that this year launched a chatbot that it says can respond to requests to locate alternative suppliers or vulnerabilities in a user’s supply chain. “The geopolitical aspect is a key topic for Siemens,” said Michael Klinger, a supply chain executive at the company.

Scoutbee chief executive Gregor Stühler said Unilever, another customer and the maker of Marmite and Magnums, was also able to identify new suppliers when China went into lockdown during the pandemic.

Evan Smith, chief executive of New York start-up Altana, said the company, whose customers include Danish shipping group Maersk as well as the US border authorities, has scoured customs declarations, shipping documents and other data to build a map connecting 500mn companies globally.

Customers can use its AI-enabled platform to trace products back to suppliers in Xinjiang, Smith added, or track if their own products are being used in Russian weapons systems.

“Just to build the map, you’re talking about billions of data points in different languages. The only way you can work through all that raw data is with AI.”

Up to 96 per cent of supply chain professionals are planning to use AI technology, according to a survey this month of 55 executives by logistics group Freightos, although only 14 per cent were already using it.

Almost a third believed that using AI would lead to significant job cuts in their business, however, underlining concerns over the technology’s impact on job security.