For executives, making strategic technology decisions is always a tough call and at the same time a very important one. Especially these days with AI, there's often an implicit expectation that adopting some form of artificial intelligence, whether generative AI or another solution, is the way to go. With all the hype going on, the hard part for business leaders is to successfully assess whether AI is truly the best fit for their needs or not.

Approaching AI with a "solution in search of a problem" mindset usually results in more problems than it solves initially. With an explosion of interest in generative AI, many organizations rushed to adopt it simply because it was the latest trend, rather than assessing whether it was appropriate for their specific business challenges. Instead of asking, "How can we use AI?" The more strategic question is: What are our company's biggest challenges or opportunities, and what technology will best address them?

Once that foundation is established, the next step is to look at AI's capabilities. What is it particularly good at now? What will it be best at in the future? Additionally, is AI the most effective solution to the identified problem? By framing the decision in this fashion, the path ahead becomes much clearer—whether it means embracing AI, using a different type of technology, or taking a completely different approach.

Read more about what every small business should do for successful AI adoption

The Role of AI in Supply Chain Management

Supply chains are complex ecosystems with many moving pieces, huge volumes of data, and industry-specific standards that vary by vertical. We could spend a long time digging into the complexities of supply chain operations, but the question that matters the most is: What are the most significant challenges and opportunities that advanced technology can help address?

Focusing solely on the problems within supply chains is one thing, but it’s more useful to take an optimistic view of the opportunities available for actual improvement and transformation. The COVID-19 pandemic provided a great reminder of the critical role supply chains play in global commerce. It exposed vulnerabilities, highlighted inefficiencies, but perhaps most importantly, accelerated the need for innovation in supply chain management.

Moving from a siloed approach, in which supply chains are seen as separate functions, like warehouse management, to a more comprehensive, company-wide view is where the biggest opportunity lies. When a business runs, supply chains are deeply connected to every other part of the business. The best way for modern technology, especially AI, to improve this interconnectedness is in three main ways:

A Connected, Real-Time System

Traditional supply chains frequently rely on fragmented data and obsolete processes. AI enables a much more dynamic, real-time approach, in which insights are continuously updated and shared throughout the supply chain.

Intelligent Feedback Loops

Data is produced at every stage of the supply chain. AI-driven systems can turn that data into ongoing feedback loops, so promising that every decision at one stage improves the next. Over time, these self-learning systems improve processes, therefore increasing supply chains' adaptability and making them smarter.

Flexibility and Optionality

The modern supply chain must be adaptable to disruptions and changing demands. AI excels at building adaptable, extensible structures that enable businesses to respond dynamically. AI-powered systems provide unparalleled flexibility, whether it's optimizing inventory, rerouting logistics in real time, or predicting supply fluctuations.

AI's strength is its ability to learn, predict, and optimize. Its probabilistic nature enables businesses to move beyond rigid rule-based systems and adopt dynamic, data-driven decision-making.

Prioritizing AI Initiatives in the Supply Chain

Based on the needs and willingness to take risks, each company will set its own priorities. In any case, having a structured approach can help you make better decisions. One way to think about setting priorities is to look at the size of the prize, meaning that you’ll have to balance quick wins against long-term, high-value projects.

Important things to think about are:

1. Total Cost of Ownership: Some AI solutions need a lot of computing power and have ongoing costs to run them.  Businesses have to think about how much it will cost to implement a plan and how much it will help them.
2. Data Readiness: Is the data you need already available?  If not, what safe and effective way will you have to use to collect it?  Also, businesses need to think about whether the data comes from inside or outside the company and how it will flow through the system.
3. Operational Readiness: Putting AI into use is, besides technology, also about people.  What skills and resources are needed to start and keep up an AI project?

After looking at these factors, businesses can find the most promising opportunities. Companies usually start with pilot programs to test AI-based solutions before putting them into use across the whole supply chain.

Measuring ROI in AI-Powered Supply Chains

Measuring ROI is different for each project. Some projects have clear, direct financial benefits, like making things more efficient, cutting costs, or increasing revenue. Others help reach strategic goals that are harder to measure but just as important.

As an example, when a business is in the optimization phase, decisions may be based on hard math. Sometimes, when a business is growing or entering a new market, it may put long-term strategic benefits ahead of short-term financial returns. It doesn't matter what method you use; what matters is that you are clear about what you want to measure and that you keep track of it consistently.

AI as a Competitive Differentiator

Supply chain optimization is more than just cost savings; it can also be an area of competitive advantage.  Consumers have traditionally paid little attention to supply chains; they simply see groceries on shelves and buy them.  However, AI-driven efficiencies can result in improved customer experiences.

Customers can really benefit from personalized shopping experiences, like getting coupons in real time based on what they've already bought. AI helps companies stop being seen as just sellers of goods and start building brand loyalty by making experiences better. 

Lastly, the goal of every business should be to give its customers the best value. AI and technology should help reach that goal if they are used correctly, whether it's by improving processes, making service faster, or creating whole new ways to do things. Even if the effect isn't always clear, when it's done right, it makes everything seem better: things just work better, faster, and more smoothly.

Build vs. Buy: Strategic Considerations for Generative AI

When evaluating new technology initiatives, businesses frequently face the classic build-versus-buy decision. Some AI tools are still in their early stages, while others are more advanced. In some cases, businesses may choose to create custom solutions because an off-the-shelf option isn't available.

Generative AI uses a familiar decision-making framework that businesses have successfully applied to previous technologies. Many third-party providers make significant investments in improving their offerings, competing to provide the best solutions. Not leveraging these innovations through strategic partnerships would be a missed opportunity. A well-balanced approach combines external partnerships and proprietary development.

Some initiatives need custom-built solutions due to intellectual property (IP) concerns, distinct business models, or specialized operational requirements. In these cases, enterprises may discover that off-the-shelf solutions cannot provide the level of differentiation required. When generative AI provides a clear advantage in solving a specific problem, a tailored approach becomes the obvious choice.

Proprietary Development and Enterprise Software Strategy

As enterprises expand their AI capabilities, they must carefully manage the balance between proprietary development and integrating third-party solutions. This challenge is not fundamentally different from past technology shifts, as each era brings new tools, but the strategic considerations remain largely the same.

The key step is to establish a strong foundation from the outset. Privacy, security, and data governance must be prioritized so that internal development efforts do not inadvertently expose proprietary data or intellectual property. If successfully addressing these concerns from the beginning, enterprises can reduce risks and at the same time unlock AI’s full potential.

This is why a necessary first step is setting up the right foundation. Even when starting small, companies must put the necessary safeguards in place. A well-designed foundation ensures that generative AI initiatives align with business goals while maintaining control over sensitive data and proprietary insights.

How Solwey Can Help your Business

At Solwey, we have a strong background in custom software development, and we bring industry expertise to every project, delivering software that not only works, but works for you. Whether you work in finance, healthcare, retail, or manufacturing, our industry-specific solutions are tailored to the specifics of your field.

If you’re unsure where to start, we can help you formulate a plan. Just tell us about your challenges and what’s holding you back. We can guide you through finding a solution, whether that means optimizing existing tools or building something new.

Additionally, with Solwey you don't have to sacrifice price to get exceptional service. Our competitive pricing structure ensures that you receive high-quality custom software without breaking the bank. With our agile processes, we can deliver results faster, allowing you to respond quickly to market demands or operational changes.

We place a high value on dependability and customer support. We will be there for you from start to finish, and beyond. Our team is committed to providing seamless support, ensuring that your software runs smoothly and your business runs more efficiently.

Allow us to be your trusted partner in driving your digital transformation. Choose Solwey for quick, adaptable, and dependable software solutions that will keep you ahead of the competition.

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