An AI Wake-Up Call for Supply Chain Leaders

A growing imperative for leaders

Spencer Stuart’s recent Measure of Leadership report, which surveyed more than 2,300 CEOs and board directors, shows that GenAI is on the agenda of leadership teams worldwide, particularly in Asia.

• Globally, 40 percent of CEOs and directors say that GenAI is a priority they are already addressing. In Asia that figure sits at 50 percent.
• In Asia, 38 percent of CEOs and directors say that AI will help them personalize offerings or deliver a better customer experience, compared with just 14 percent worldwide.
• Only 14 percent of CEOs and directors in Asia say that the technology is already paying off, and just 2 percent say it will pay off in the next six months (compared with 19 percent and 11 percent, respectively, in the global sample).

One clear way for companies in Asia to close that gap and start reaping rewards from AI is to adopt it more comprehensively. Along the supply chain, GenAI can improve performance across a wide range of applications. For example, by pulling in large volumes of historical sales data and integrating that with seasonal shifts, marketing and promotions, economic indicators and other factors, supply chain leaders can get a better sense of what’s coming — and how to plan for it.

“Currently, demand forecasting is essentially being done by human labor, which is not accurate enough and prolongs lead times to the supply chain side,” says Yuichiro Ikeda, a director at SIGMAXYZ, a Japanese consulting company. “Using GenAI to make demand forecasting more accurate over a longer period of time can make it easier to set up the supply chain, helping manufacturing become more efficient and optimized.”

What’s more, these benefits come without specialized software, standardized data or extensive coding. “Tasks like demand forecasting, supply planning, logistic capacity and inventory management traditionally required scientists to design specific models for each domain,” says Wang QingFa, chief data officer at Haier Smart Home. “Nowadays, large language models (LLMs) have the capacity to learn a company’s entire sales history to identify patterns, trends or seasonal variations, potentially eliminating the need to rebuild models from scratch due to their generalization capabilities.”

Beyond the cost implications, GenAI can trigger a range of social benefits across the supply chain, in areas like sustainability and safety. It can proactively identify risks among suppliers and other factors (like geopolitical considerations or weather), streamline procurement and optimize inventory. Best of all, GenAI solutions can respond to conversational queries from all stakeholders ranging from C-level leaders to front-line employees, making information far more accessible and actionable.

To capture these benefits, companies in Asia should focus on four priorities:

Foster more collaboration between technology and operations leaders

“Large organizations face a dilemma,” says a global head of sourcing at an international mining company. “They have a large cohort of smart data scientists and IT specialists who understand generative AI. They also have solid operational expertise. The challenge for top leadership is to bring these two worlds together so that they understand each other and can collaborate more effectively to solve problems.”

In other words, operations and technology leaders need to speak each other’s language, agree on specific business problems to solve and collaborate on critical decisions like vendor selection and data standards.

Integrate the supply chain with strategy

“Some companies are making significant investments in digital, AI and GenAI, but many organizations are adopting these technologies in an unstructured manner without a clear understanding of the business objectives,” says a managing director at a large strategy consulting firm in India.

Instead, supply chain leaders need to advance beyond passive processors of orders and become true partners to the business, with the ability to identify business challenges, meaningfully impact performance and evolve with the business as strategic priorities change. To that end, supply chain leaders need a bigger voice in shaping the company’s overall direction.

“This shift calls for chief supply chain officers with the ability to drive holistic supply chain transformations, to articulate their strategic value to shareholders and customers, and to draw from international talent to elevate the function’s profile within traditional firms,” says Ikeda at SIGMAXYZ. “This is similar to the historical movements to elevate IT departments to more strategic roles, and leadership becomes even more important when integrating advanced technologies like GenAI into the supply chain.”

Embrace “tech-forward, human-empowered”

Supply chain leaders should focus on developing stronger capabilities in GenAI. This is not about getting bogged down in the technical details but knowing enough to choose specific applications and monitor performance. “We have to be more digitally aware than we’ve ever been,” says Geoff Walker, global supply chain executive and digital transformation leader at Kimberly-Clark.

Because GenAI is a rapidly evolving technology with such immense potential, some companies are creating new leadership roles specifically tasked with managing its implications at an enterprise level, such as the chief artificial intelligence officer.

In addition, supply chain leaders need to understand when to use human intuition to adjust — or overrule — the results from GenAI. “You’ve got to learn enough about it that you can be comfortable that what you’re doing is the right thing for the business,” Walker says.

Create a learning culture

Finally, many COOs and supply chain leaders have typically focused on efficiency and order. Teams get tasked with specific processes, which need to happen in a precise and replicable manner. Because GenAI is so new, it requires experimentation, and teams will face a learning curve and inevitably encounter setbacks. For that reason, supply chain heads need to be less like managers and more like coaches. They need to persuade their people to adopt the technology and provide a level of autonomy that enables them to make mistakes and “fail fast.” Doing so requires fostering an AI-ready culture based on openness, continuous learning and risk tolerance.

In addition, leaders may need to change the way they evaluate talent, prioritizing agility and breadth of thinking over rigid adherence to standards. As Jasmine Lin, senior vice president at BlueFocus Group, says, “We don’t particularly expect to find what’s commonly referred to as ‘mature talent’ in GenAI, because the technology is changing every day. Instead, we value a person’s learning agility — specifically perseverance (how stubbornly they persist in trying to solve a problem) and breadth of thinking (their ability to use various methods in solving it).”

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GenAI is a transformative technology, but companies can’t capitalize unless they implement it across the entire organization. As our interviews with senior executives across Asia Pacific show, the supply chain at many companies still lags in terms of implementing GenAI. The good news? Because the technology is relatively new, there is still time to catch up. This is ultimately a leadership challenge — senior teams that hesitate will leave the door open for their competitors, while those that are proactive can seize the opportunity.