AI in Supply Chain Market

AI in Supply Chain Market Size

The global AI in Supply Chain Market size was valued at USD 6,136.3 million in 2023 and is projected to grow from USD 8,493.9 million in 2024 to USD 89,179.9 million by 2031, exhibiting a CAGR of 39.92% during the forecast period. The growth of the market is driven by the rising need for enhanced efficiency, cost reduction, real-time decision-making, advanced data analytics, and the integration of IoT technologies.

In the scope of work, the report includes solutions offered by companies such as Amazon Web Services, Inc., American Software, Inc., FedEx, IBM, Intel Corporation, Microsoft, NVIDIA Corporation, Oracle, project44, SAMSUNG, and others.  

The expansion of the AI in supply chain market is fueled by rapid advancements in AI technology, enabling more efficiency and accuracy in the decision-making processes. Companies are increasingly adopting AI to enhance supply chain visibility, reduce operational costs, and improve customer satisfaction. The integration of AI with Internet of Things (IoT) devices allows for real-time data collection and analytics, further optimizing supply chain management.

Additionally, the growing need for demand forecasting, inventory management, and logistics planning fuels AI adoption. Enhanced computational power and the availability of big data are further contributing to market growth, providing the necessary infrastructure for implementing AI solutions.

• In March 2024, One Network Enterprises (ONE) and iot squared, a joint venture between stc Group and Saudi Arabia’s Public Investment Fund, signed a Memorandum of Understanding (MoU), in Malham, Saudi Arabia. The agreement aimed to explore digital supply chain networks and deploy technologies such as data analytics and artificial intelligence to optimize supply chain processes across the Middle East. The partnership focused on implementing a unified digital platform to enhance supply chain visibility, traceability, and efficiency.

The AI in supply chain market is experiencing robust growth, mainly due to technological advancements and increased adoption across various industries. AI applications in supply chains include predictive analytics, warehouse automation, demand forecasting, and transportation management. Companies are leveraging AI to enhance efficiency, reduce costs, and gain competitive advantages.

The market is characterized by significant investments from major technology firms and supply chain solution providers. North America leads the market due to early technology adoption and strong industrial bases. However, Asia-Pacific is rapidly emerging as a lucrative market for AI in supply chain, propelled by the expansion of manufacturing and e-commerce sectors.

AI in supply chain refers to the application of artificial intelligence technologies to optimize and streamline supply chain processes. This encompasses a range of AI-driven solutions, including machine learning, natural language processing, and computer vision, aimed at improving decision-making, operational efficiency, and predictive accuracy.

Key areas of application include demand forecasting, inventory management, supplier relationship management, and logistics optimization. AI enables companies to process large volumes of data, identify patterns, and make informed decisions in real-time. The objective is to create a more responsive, efficient, and resilient supply chain that possess the ability to adapt to dynamic market conditions and evolving consumer demands.

Analyst’s Review

Manufacturers are increasingly focusing on integrating AI solutions to enhance supply chain efficiency and resilience. These efforts include the development of advanced AI-driven software for real-time analytics and predictive maintenance. Companies are launching new products, such as AI-powered robots and automated systems, to streamline operations and reduce costs.

• In November 2023, IndiGo Airlines, launched an AI chatbot named 6Eskai, powered by GPT-4 technology. Developed in-house with Microsoft, the chatbot addressed customer queries in 10 languages and enabled ticket booking across its network. Early results showed a 75% reduction in customer service workload. The bot, with 1.7 trillion parameters, performed various tasks, including booking tickets, handling web check-ins, and applying discounts, using natural language conversations.

The growing emphasis on IoT integration is allowing for better data collection and decision-making. To maintain a competitive edge, companies should continue to prioritize investing in AI technologies and workforce training.

Collaboration with AI technology providers facilitates smoother adoption and implementation of these technologies. Additionally, leveraging cloud-based AI solutions offers scalability and flexibility. Continuous innovation and strategic partnerships are crucial for maintaining a competitive edge in the evolving AI in supply chain market.

AI in Supply Chain Market Growth Factors

The increasing need for supply chain efficiency is boosting the growth of the AI in supply chain market. Companies are continuously seeking ways to reduce operational costs and improve productivity. AI technologies, such as machine learning and predictive analytics, are providing solutions by optimizing inventory management, enhancing demand forecasting, and streamlining logistics.

These technologies enable companies to make data-driven decisions, leading to more accurate demand predictions and efficient resource allocation. Additionally, AI assists in identifying potential disruptions and mitigating risks, ensuring a smoother supply chain operation. The aim of achieving efficiency and cost reduction is propelling the adoption of AI solutions across various industries, thereby contributing to market growth.

A significant challenge hampering the expansion of the AI in supply chain market is the high cost and complexity of AI implementation. Numerous companies face challenge due to the significant financial investment and technical expertise needed to integrate AI solutions. Manufacturers are overcoming this challenge by adopting a phased approach toward implementation.

Companies are starting with smaller, pilot projects to demonstrate ROI and build internal expertise. Partnering with AI technology providers reduces initial costs and provides access to specialized knowledge.

Additionally, leveraging cloud-based AI services further lowers infrastructure expenses. Gradually scaling up AI adoption and utilizing external partnerships enable companies to manage costs and complexity more effectively, thereby facilitating smoother AI integration into their supply chains.

AI in Supply Chain Market Trends

The AI in supply chain market is experiencing the surging integration of AI with Internet of Things (IoT) technologies. Companies are increasingly deploying IoT sensors and devices across their supply chains to collect real-time data. AI systems are then used to analyze this data, providing actionable insights and predictive analytics.

This integration enhances supply chain visibility, enabling more effective tracking of inventory, assets, and shipments. It further allows for proactive maintenance and reduces downtime. By combining AI and IoT, businesses are achieving greater operational efficiency, improving decision-making, and responding to market changes and evolving consumer demands.

AI-driven automation is another significant trend impacting the supply chain market landscape. Companies are increasingly adopting AI-powered robots and automated systems to perform repetitive and labor-intensive tasks such as sorting, packaging, and transportation. This automation is improving accuracy, reducing human error, and lowering operational costs.

Furthermore, AI-driven automation enables faster processing times and enhances overall productivity. In warehouses, AI systems are optimizing space utilization and streamlining inventory management. As labor shortages and wage pressures continue to rise, the adoption of AI-driven automation in supply chains is becoming increasingly critical for maintaining competitiveness and enhancing operational efficiency.

Segmentation Analysis

The global market is segmented based on offering, technology, deployment mode, application, industry vertical, and geography.

By Offering

Based on offering, the market is categorized into hardware, software, and services. The software segment led the AI in supply chain market in 2023, reaching a valuation of USD 2,989.9 million.

This expansion is fueled by the increasing demand for advanced analytics, predictive modeling, and real-time decision-making tools. Software solutions are enabling companies to optimize their supply chains, enhance efficiency, and reduce operational costs. The scalability and flexibility of software applications make them highly attractive for various industries.

Additionally, continuous advancements in AI algorithms and machine learning models are improving the functionality and effectiveness of these software solutions. The ease of integration with existing systems and the ability to provide customized solutions are further fueling the growth of the software segment.

By Technology

Based on technology, the market is classified into machine learning, computer vision, natural language processing, context aware computing, and robotic process automation. The machine learning segment is set to witness significant growth at a CAGR of 40.88% through the forecast period (2024-2031).

This growth is attributed to the increasing adoption of machine learning algorithms in demand forecasting, inventory management, and predictive maintenance. Machine learning models are capable of processing vast amounts of data to identify patterns, predict outcomes, and optimize operations. The technology is proving invaluable in enhancing decision-making accuracy and efficiency within supply chains.

The continuous improvement in computational power and data availability is further propelling the adoption of machine learning. Its ability to learn and adapt over time is making machine learning an essential tool for modern supply chain management, thus bolstering segmental development.

By Industry Vertical

Based on deployment mode, the market is segmented into cloud and on-premises. The cloud segment secured the largest AI in supply chain market share of 65.52% in 2023. Cloud-based AI solutions offer significant advantages, including reduced upfront costs, ease of access, and the ability to scale resources based on demand. They enable real-time data processing and analytics, which are critical for dynamic supply chain operations.

Additionally, cloud deployment facilitates seamless integration with other cloud services and applications, thereby enhancing overall efficiency. The continuous improvements in cloud security and compliance standards are prompting an increasing number of companies to adopt cloud-based AI solutions, ensuring data protection and regulatory adherence.

AI in Supply Chain Market Regional Analysis

Based on region, the global market is classified into North America, Europe, Asia-Pacific, MEA, and Latin America.

North America AI in supply chain market share stood around 34.78% in 2023 in the global market, with a valuation of USD 2,134.4 million. This dominance is facilitated by several factors, including the early adoption of advanced technologies and the presence of major technology companies that prioritize innovation. The region benefits from a well-established infrastructure and a high level of investment in AI research and development.

Additionally, North American companies are actively seeking ways to enhance efficiency and competitiveness, leading to increased adoption of AI solutions in supply chain management. The regulatory environment and favorable government support for technological advancements further contribute to the region’s leading position in the market.

Asia-Pacific is poised to experience notable growth at a staggering CAGR of 41.89% through the estimated timeframe. This rapid growth is supported by the region's expanding manufacturing sector and booming e-commerce industry. Countries such as China, India, and Japan are investing heavily in AI technologies to optimize their supply chains. The increasing adoption of IoT devices and digitalization initiatives are further fueling this growth.

Additionally, the availability of a large, skilled workforce and favorable government policies that support technological advancements are compelling companies to implement AI solutions. The region's dynamic market conditions and the pressing need for efficient supply chain management are aiding regional market growth.

Competitive Landscape

The AI in supply chain market report will provide valuable insight with an emphasis on the fragmented nature of the industry. Prominent players are focusing on several key business strategies such as partnerships, mergers and acquisitions, product innovations, and joint ventures to expand their product portfolio and increase their market shares across different regions.

Expansion & investments are the major strategic initiatives adopted by companies in this sector. Industry players are investing extensively in R&D activities, building new manufacturing facilities, and supply chain optimization.

List of Key Companies in AI in Supply Chain Market

• Amazon Web Services, Inc.
• American Software, Inc.
• FedEx 
• IBM
• Intel Corporation
• Microsoft 
• NVIDIA Corporation
• Oracle
• project44
• SAMSUNG 

Key Industry Developments

• April 2024 (Launch): Logility, Inc. unveiled dynamic inventory modeling as a new feature of its cloud-based Logility Digital Supply Chain Platform. This capability enables the optimization of network configuration by  integrating considerations of inventory costs and storage constraints. By leveraging AI and machine learning, the platform continuously analyzes and improves supply chain performance, providing comprehensive insights into inventory and network decisions.
• April 2023 (Launch): Oracle introduced new features in its Fusion Cloud Applications Suite, aimed at enhancing supply chain planning, operational efficiency, and financial accuracy. Updates included AI-powered lead time estimates, improved quote-to-cash processes, and automated rebate management capabilities. These enhancements helped organizations streamline operations, reduce costs, and improve order fulfillment, providing a more integrated and efficient supply chain and enterprise management solution.

The global AI in supply chain market is segmented as:

By Offering

• Hardware
• Software
• Services

By Technology

• Machine Learning
• Computer Vision
• Natural Language Processing
• Context Aware Computing
• Robotic Process Automation

By Deployment Mode

• Cloud
• On-Premises

By Application

• Risk Management
• Freight Brokerage
• Warehouse Management
• Fleet Management
• Virtual Assistant
• Others

By Industry Vertical

• Healthcare
• Retail
• Automotive
• Aerospace
• Food & Beverage
• Others

By Region

• North America
  • U.S.
  • Canada
  • Mexico
• Europe
  • France
  • U.K.
  • Spain
  • Germany
  • Italy
  • Russia
  • Rest of Europe
• Asia-Pacific
  • China
  • Japan
  • India
  • South Korea
  • Rest of Asia-Pacific
• Middle East & Africa
  • GCC
  • North Africa
  • South Africa
  • Rest of Middle East & Africa
• Latin America
  • Brazil
  • Argentina
  • Rest of Latin America