Is AI ready for takeoff? Analysis finds only 11% of firms have gone beyond…
Technology investment is having a nearly immediate impact on the bottom line, but when it comes to the most transformative technology today—artificial intelligence—the real investment isn’t happening.
That is the conclusion of research firm Zero100, which concluded that while most businesses are interested in AI and are rapidly investing in AI, most have not moved past the pilot stage at this point.
“AI is fundamentally changing the landscape of supply chain management—and it’s happening at a faster rate than we’ve seen before,” said Kevin O’Marah, chief research officer and co-founder of Zero100. “It’s the biggest tech inflection point since the internet and, while AI experiments have been ongoing, the rise of generative AI is pushing digitization to the forefront. Boards recognize that the ability to digitize and embrace AI will be the difference between prosperity and decline over the next decade. They now need a clear path forward to capitalize on this opportunity.”
Despite this, though, Zero100’s analysis of public earnings calls has found few successes to tout. According to the firm’s research, only 11% of companies have deployed AI beyond the pilot stage, and while 88% of CEO’s spoke of their company’s AI vision, only one in four was able to cite the results of an AI project.
Technology’s big payback
When it comes to supply chain technology investment generally, the cloud-based integration platform Cleo found that an overwhelming majority of companies saw benefits from the deployment within 24 months.
The report, Cleo’s 2024 Ecosystem Integration Global Market Report, found that 97% of companies surveyed had invested in supply chain technologies in 2023 and 35% stated that investment led to increased benefits. A full 81% said that supply chain technology investments delivered business improvements within 24 months generally, and 80% indicated they saw increased revenue in the same year the investment was made.
“A company’s supply chain is simply a series of commitments that tether across an ecosystem and must be delivered upon,” Tushar Patel, CMO at Cleo, said in a release. “And for companies to uphold those critical business commitments, they need to consistently invest in their supply chain technology, otherwise they stand to take a hit to their relationships—impacting their bottom line.”
But investment in AI seems to be taking a bit longer. Zero100 recommends companies employ a “90-day AI fast track” plan. The plan creates three separate 90-day attack plans to accelerate digital adoption. It is:
-
Define & challenge goals (PRFAQ approach):
- Future state: Craft a press release outlining your ideal future. Work backward for a focused, customer-centric strategy.
- Test assumptions: Develop FAQs to challenge your goals. Consider external factors and how AI can help achieve them.
2. Balance & speed (Star Model):
- Collaborate & experiment: The Star model fosters collaboration and rapid experimentation while maintaining core processes.
- Break silos, build speed: Implement lean workflows integrating business and technical teams for AI, data, and process reinvention.
3. Close collaboration & shared innovation (MLOps):
- Break down silos: MLOps demands tight integration between supply chain, technology, and data science teams.
- Shared capacity: Foster seamless collaboration and information sharing for continuous improvement across departments.
AI market leaders
According to research from Gartner, top-performing supply chains are investing in artificial intelligence and machine learning at twice the rate of their lower-performing peers. Those same firms are also able to leverage their size to utilize productivity as a focal point for sustaining business momentum over the next three years. Conversely, lower-performing companies are more likely to utilize efficiency or cost savings.
“Top-performing supply chain organizations make investment decisions with a different lens than their lower-performing peers,” said Ken Chadwick, VP analyst in Gartner’s Supply Chain Practice. “Enhancing productivity is the key factor that will drive future success and the key to unlocking that productivity lies in leveraging intangible assets. We see this divide especially in the digital domain where the best organizations are far ahead in optimizing their supply chain data with AI/ML applications to unlock value.”
Gartner surveyed 818 supply chain practitioners across geography and industry from August through October 2023. Organizations were scored across five key metrics measuring business and people outcomes to determine their performance level. High performers were defined as those organizations that exceeded expectations over the past 12 months across the five measurements.
When it comes to the processes using AI/ML, 40% of high performers are using AI/ML in demand forecasting, versus just 19% of low performers.
