The Role of Artificial Intelligence in Transforming Supply Chain Management: A Focus on Demand Forecasting and Inventory Optimization

Abstract

This research delves extensively into the value-added role of Artificial Intelligence (AI) in enriching and simplifying the nuances of supply chain management (SCM), with specific reference to two very critical areas: demand forecasting and inventory optimization. As supply chains expand and increase in complexity, traditional management techniques tend to fall short of meeting the needs created by dynamic market forces and breakdowns in the supply chain. Taking a quantitative research orientation, this research was successful in gathering data from a sample size of 150 professors who were deployed in Pakistan using a self-administered questionnaire with a Likert scale. The results show that, while overall perceptions and awareness towards the use of AI in the context of SCM are generally positive, statistical findings revealed that the impact of AI on the accuracy of demand forecasting was not found significant within the confines of this given sample. Nevertheless, it must be noted that high correlations were established between key capabilities of AI, including greater supply chain transparency, enhanced decision-making efficiency, and increased resilience in times of crisis. This research underscores the critical need for an expansive use of AI technologies and the requirement of empirical validation in actual supply chain environments. In addition, it underscores the primary need for training and awareness programs to facilitate organizations to be able to leverage and avail themselves fully of the immense potential that AI can offer in the context of SCM.