Value Creation in Supply Chain Management Through Generative Artificial Intelligence

Abstract This paper aims to study the potential of Artificial Intelligence (AI) and Generative Artificial Intelligence (Gen AI) in value creation of supply chain operations. Value creation in the supply chain is achieved through enhancing customer satisfaction, lowering costs, and improving efficiency. However, the effective integration of Gen AI into supply chain management (SCM) is unclear to many organizations. We explore the integration of Gen AI, and GPT-4, the most recent version of Open AI, and how it is useful for value creation in supply chain operations. This study aims to examine how Gen AI can improve supply chain processes, make autonomous decisions, manage resources, and identify new business expectations. To gain insights on the use of the Generative AI tool, GPT-4, secondary data from an Economist Impact report sponsored by GEP 2024 is used. The report is based on a survey of 200 CEOs and supply chain officers who are familiar with their organization's supply chain operations. Key performance indicators (KPIs) such as, customer satisfaction, on-time delivery, inventory optimization, and automation are used to measure the value creation in the supply chain. According to research findings, within the next three years, 26–50% of supply chain operations can be automated or optimized using Gen AI. Demand forecasting and inventory optimization functions of supply chain management get the most benefit from generative AI. Supply chain resilience and sustainability are the goals in the business for the use of Gen AI. Data security, privacy, and workforce development are major challenges for using Gen AI. This paper shares case studies of retail store operations with the Gen AI tool GPT4.0 in supply chain operations and value creation. This research is helpful to supply chain managers, academics, researchers, and practitioners to use as a guidance to identify how Gen AI can be applied to improve efficiency, accuracy, and sustainability in supply chain operations. Keywords: Generative Artificial Intelligence, Value Creation, Key Performance Indicators, Open AI, Customer Satisfaction