Consumer proximity to distribution networks is becoming a critical advantage for retailers in an increasingly AI-driven online shopping landscape, according to insights shared during a virtual event hosted by Supply Chain Dive and Retail Dive on January 28. Rupal Deshmukh, a partner in the strategic operations practice at global management consulting firm Kearney, emphasized that convenience and speed are paramount for today’s online shoppers.
Deshmukh noted that AI service providers like OpenAI, the creator of ChatGPT, are transforming consumer behavior by facilitating impulsive purchases. For instance, ChatGPT can provide immediate solutions to issues, such as eliminating gnats from house plants, which can lead to last-minute buying decisions. “From a supply chain perspective, what it means is ensuring any changes you’re making on the supply chain side are as close to the customer as possible,” Deshmukh added. She further advised companies to integrate AI-driven shopping insights into their demand forecasting models to optimize inventory placement.
Rick Jordon, senior managing director at FTI Consulting, highlighted that transportation costs, aside from last-mile delivery, have remained relatively low over the past two years, allowing for cost-effective inventory positioning at the regional level. “We’ve definitely seen that strategy change a little bit, but you know, all you need is a couple of ticks in transportation cost, and that inventory push will go back to more forward deployment versus perhaps regional deployment,” Jordon remarked.
As inventory placement strategies adapt, companies are increasingly focused on lowering the total supply chain cost per case through automation in distribution centers. Deshmukh pointed to Walmart as a prime example, revealing that over 60% of the retailer’s U.S. stores receive freight from automated fulfillment centers.
The overarching theme is that supply chain strategies must continuously evolve to align with consumer preferences for speed and convenience. “Supply chains can’t afford to be way behind what’s changing with the consumer, more in this day and age than before,” Deshmukh said, underscoring the necessity for agility in an era where AI is reshaping retail dynamics.
As retailers navigate these challenges, the integration of AI technologies in supply chain management will likely become increasingly crucial. This shift not only promises to enhance operational efficiencies but also ensures a closer alignment with consumer expectations. The future of retail will depend on how well companies can leverage these advances to meet the demands of an evolving marketplace.
For more insights on this topic, visit OpenAI, Kearney, and FTI Consulting.
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