Supply Chain Visibility: Monitoring On-shelf Availability with AI
September 11, 2024
Picture a world where store shelves are never empty, yet never overstocked. A retail utopia where every product arrives precisely when needed as if guided by an invisible hand. This isn't science fiction—it's the power of Artificial Intelligence (AI) which is revolutionizing our ability to gain end-to-end visibility of the supply chain, from order placement to vendor management and ultimately to on-shelf product availability (OSA).
As we dive into AI-driven on-shelf availability monitoring, we’re not just talking about keeping shelves stocked—we’re exploring a revolution that’s redefining the essence of retail efficiency and customer satisfaction.
Let's explore how generative AI is transforming this landscape and how businesses are leveraging its power.
The Power of AI in Supply Chain Visibility
Artificial intelligence is making a significant impact on supply chain mapping and operations largely due to its versatility. Rather than being a singular solution, AI encompasses a wide range of applications that can be integrated into diverse aspects of the supply chain. This adaptability allows AI to be deployed in numerous ways, addressing various challenges and optimizing different processes throughout the supply chain network. According to research conducted by Gartner, leading supply chain companies are adopting Artificial Intelligence and Machine learning technologies at more than double the rate of their underperforming counterparts to enhance operational efficiency.
Here are some of the most impactful AI deployments and how they're being utilized in supply chains:
Demand Forecasting for On-Shelf Availability
One of the most significant applications of AI in retail is demand forecasting and stock replenishment. AI algorithms can analyze historical sales data, market trends, weather patterns, and even social media sentiment to predict future demand accurately. This allows retailers to maintain optimal inventory shelf levels, reducing both stockouts and excess inventory. AI can help:
- Predict short-term and long-term demand patterns
- Account for seasonality and special events
- Optimize inventory levels across multiple stores
Real-Time Monitoring and Tracking
AI-powered systems enable real-time inventory tracking throughout the supply chain. By processing data from IoT sensors, GPS, and RFID tags, AI provides continuous visibility of stock levels, from warehouses to store shelves. This real-time monitoring allows companies to:
- Quickly identify and respond to disruptions
- Ensure products reach store shelves when needed
- Optimize in-store inventory levels
- Reduce the risk of stockouts on retail store shelves
Real-time inventory visibility is particularly crucial for grocery store shelves, where product freshness is a key concern. AI systems can alert staff when perishable items need restocking or when they're approaching expiration dates.
Automated Decision-Making to Increase Availability
AI systems can automate routine decision-making processes, improving efficiency in inventory shelf management. AI-powered automated decision-making has been shown to significantly increase availability of products on shelf. This automation allows retail professionals to focus on more strategic tasks while AI handles day-to-day shelf stock operations, such as:
- Triggering reorder points
- Adjusting safety stock levels
- Optimizing product placement on shelves
- Scheduling restocking activities
Improved Supplier Relationship Management for Consistent Supply
AI enhances visibility into supplier performance and risks, which is crucial for maintaining consistent product availability on retail shelves. AI-based supplier assessment tools provide deeper insights into supplier capabilities and potential risks, helping retailers ensure adequate levels of product availability in stores. This includes:
- Evaluating supplier reliability
- Predicting potential supply chain disruptions
- Optimizing order quantities across multiple suppliers
- Enhancing collaboration with key suppliers
“Technology doesn’t give you visibility to reliably prevent supply disruptions before they happen, but it can give you information that can help you respond to supply-chain disruptions much faster than human buyers can,” Michael Klinger, Siemens’s senior director of supply chain excellence.
Why Monitoring On-Shelf Availability with AI is Important
On-shelf availability is a critical metric in retail operations, and the integration of artificial intelligence has revolutionized how businesses monitor and manage their shelf inventory. Here's why AI-driven on-shelf availability monitoring is crucial:
Examples of Businesses Leveraging AI for Supply Chain Optimization
Walmart Pactum AI
Walmart has implemented an innovative AI-powered negotiation tool called Pactum AI to streamline its procurement processes. This software automates negotiations with a specific subset of Walmart's vast supplier network, which exceeds 100,000 vendors.
Specifically, Pactum AI targets interactions with "tail-end" suppliers - those providing low-value items that collectively represent approximately 20% of Walmart's overall spending. By automating these negotiations, Walmart aims to optimize its procurement strategy for non-critical supplies while allowing its human workforce to focus on more strategic vendor relationships.
Image Source: Pactum AI
Target’s Inventory Ledger
Target has leveraged AI and machine learning to address the challenge of unknown out-of-stock products in their retail stores. Central to this solution is the Inventory Ledger, a highly performant system built to report any change in inventory position or disposition for every item across nearly 2,000 Target stores in the United States, including multiple locations within a single store.
The Ledger system revolutionizes inventory management by processing 360,000 transactions per second, providing real-time visibility across multiple store locations. It maintains a detailed history, integrates with AI for accuracy, and detects anomalies. This comprehensive approach ensures efficient stock management, particularly for items stored in various areas.
The approach has resulted in substantial sales lift for products that would otherwise have been unavailable, and Target continues to refine these models, customizing thresholds for different product categories to optimize inventory management and enhance consumer satisfaction.
Image Source: Target
Mazaal AI Shelf Availability Monitoring System
Mazaal AI has developed an innovative solution that leverages generative AI to revolutionize on-shelf availability monitoring in retail stores. This advanced system utilizes existing CCTV camera infrastructure to provide real-time tracking of product availability on shelves.
By analyzing shelf contents in real-time, it reduces out-of-stock incidents by up to 30%, ensuring product availability and potentially boosting sales and customer satisfaction. The continuous monitoring also yields valuable data on product movement and shopping patterns, informing strategic decisions on inventory and store layout.
This solution demonstrates how retailers can use existing infrastructure to gain powerful insights, improve operations, and significantly enhance retail efficiency and customer experience by addressing the critical issue of on-shelf availability.
Wrapping Up
The integration of AI into retail supply chain management is not just a trend; it's a necessity for businesses aiming to stay competitive in today's market. By providing end-to-end visibility and enabling just-in-time shelf availability, AI is helping retailers optimize their operations, reduce costs, and improve customer satisfaction. As we move forward, the role of AI in supply chain management will only grow. Retailers who embrace this technology and leverage its capabilities will be well-positioned to meet the ever-changing demands of consumers and thrive in the dynamic retail landscape.
Anu Soyol