Study Finds Nascent Adoption of AI and Robotics in Retail and Manufacturing Supply Chains

Take a guess: How widespread is adoption of artificial intelligence (AI) in retail and manufacturing supply chains?

The answer is somewhat complicated. According to a recent survey from Eft, 46.1% of retailers and manufacturers report no usage of AI in their supply chain operations, but a significant percentage (33.4%) are using the technology in an experimental manner. Only 4% reported extensive usage on specific business processes or throughout the entire supply chain.

It’s no surprise that the hype that surrounds new technologies does not necessarily translate into industry adoption, but that does not mean that supply chain professionals should be complacent.

While not eliciting quite the excitement that AI does, warehouse robotics is another technology with grand promises. Businesses involved in e-commerce, for example, can use robots to cut warehousing costs and streamline their fulfillment processes. (It also provides a handy excuse for fulfillment mishaps. A Target representative once blamed the expired nutrition bars I received on the warehouse’s robots).

Similar to the figures on AI adoption, about half of the survey respondents are not using warehouse robotics, and another 18% say that the warehouse providers they partner with are not using robotics in their operations either.

Only 5.8% of retailers and manufacturers have robots in all of their warehouses, and 18.4% report that they are testing robotics in some of their warehouses. However, adoption rates are higher if one includes the logistics and warehouse providers that retailers and manufacturers work with. About a third of the respondents said that their supply chain partners are using robotics in some or all of their warehouses.

Source: The 2018 Supply Chain Study

As the chart above shows, the intertwined issues of cost and calculating ROI pose two of the top barriers in implementing warehouse robotics. ROI is traditionally calculated by dividing net gain by the cost of the investment, but more than half of the respondents said that their businesses use other measurements that take into account the more intangible benefits of supply chain technology investments.

Twenty-three percent look at efficiencies gained from the technology investments, 17% look at how the technology makes their supply chain more competitive and 12% estimate how the technology contributes to future organizational growth.

Forays into AI and warehouse robotics are becoming one of the top drivers of increased spending for retailers and manufacturers, edging ahead of expansion into new markets. And adoption (or lack of adoption) of AI and warehouse robotics is also related to another supply chain issue that receives no shortage of attention: talent. Acquisition and retention of talent is crucial for the digital transformation of supply chain.

For 52% of the survey respondents, creating an attractive work culture is key to getting the best tech talent, ahead of salary incentives, a visionary tech strategy or even implementation of the latest technologies.

To that end, the report notes, retailers and manufacturers are fighting against “big company syndrome” in order to innovate and attract top tech talent. About a third do not have any type of dedicated team for exploring innovative ideas. Fifty-five percent make use of subject-matter experts or ad-hoc teams, but a forward-looking 12% boast a center of excellence (CoE) or innovation lab.