Page 59 - Banking Finance December 2024

FEATURES

GenAI transforming supply chain

management

G lobal value chains are facing unprecedented GenAI for more precise demand forecasting, a valuable

capability in volatile markets.
challenges, with a series of disruptions exposing
vulnerabilities and costing billions of dollars.
Beyond forecasting, GenAI can simulate market scenarios
The solution to these upheavals could lie in an
- such as power shortages and competitor actions - and
advanced analytics system that tirelessly collects and
their impact on demand, allowing businesses to prepare
processes information from a plethora of sources to
for different outcomes and meet consumer needs despite
minimise or neutralise the impact of such disruptions.
market fluctuations.
Generative artificial intelligence (GenAI) is fast emerging
Besides improving operational efficiency, GenAI can
as a potential silver bullet, with companies investing in
GenAI across functions. A McKinsey report projected ensure compliance with growing regulatory demands for
sustainable, ethical business practices through its ability
GenAI could add $4.4 trillion to the global economy
annually. That's greater than India's GDP in FY2023. to trace material origins. This enhances transparency and
And this is just an early estimate (the study only looked builds consumer trust. GenAI can also assist design
at 63 business use cases for GenAI). teams to innovate on product designs.

From helping a leading automobile manufacturer to The implementation of GenAI in SCM is not without
optimise production schedules, to enabling a global challenges, however. Much of the training data for GenAI
logistics company to optimise warehouse layouts and models is sourced from webcrawl only post 2008, raising
picking/packing processes, GenAI has already showcased questions about data validity and applicability. GenAI
its potential to revolutionise supply chain management models could also improve accuracy ( 6070 per cent
(SCM). A recent McKinsey SCM capability assessment currently) with more specific training.
saw GenAI powered SCM beat over 90 per cent of
As the variability in prompts increases, issues around
traditional SCM practitioners.
consistency become more pronounced. The computational
GenAI can use existing datasets to generate new data, intensity required to build and deploy GenAI models
designs, or solutions for more flexible supply chains. One poses another challenge: being both expensive and
food and beverage multinational employed GenAI to resourceintensive, it could raise carbon emissions and
create ecofriendly supplychain scenarios that helped complicate ESG compliance.
identify opportunities to reduce waste, minimise carbon
These concerns should not deter companies. They are
footprint and optimise resource usage.
rather a reminder to adopt a measured approach. GenAI
By integrating diverse data sources - economic isn't going away. Its transformative potential will only
indicators, social media trends and consumer behaviour grow as the technology matures. Embracing it could help
patterns - GenAI enhances demandsensing and accurate companies to surge ahead in an increasingly competitive
forecasting. A global consumer goods company used market. (Source: BusinessLine)

52 | 2024 | DECEMBER | BANKING FINANCE