The food supply chain is unlike any other. While electronics, automotive, and consumer goods’ supply chains promote their products, the food supply chain represents a basic human necessity–food. As a requirement to everyone, foods and beverages deserve a highlighted view of the use of new technologies, including artificial intelligence (AI) and augmented reality (AR) to promote efficiencies, prevent disruptions, lower risk, and boost customer confidence. Food and beverage supply chain leaders need to know a few things about the ever-expanding role of these technologies and how they’ll influence the industry throughout 2020 and beyond.
Setting the Stage: AI and AR Represent Major Growth Areas Within the Food Supply Chain
The use of AI and AR represent significant advantages in the entire global supply chain. According to a recent survey on the growth, trends, and forecasts of the food and beverage market from 2020 through 2025 the use of AI dominated study results. AI-guided chatbots help consumers make their purchases faster and more easily. In fact, 50% of consumers will spend more time in a store or on a company’s website when customers feel that company provides superior customer service. AI chatbots provide this opportunity, and it can be used to analyze, monitor, and influence consumer behaviors and purchasing decisions. Specifically, artificial intelligence within the food and beverage sector will achieve a 65.3% CAGR between 2020 and 2025.
The food and beverage industry does have a problem with large-scale deployment of AI and AR. While these technologies can boost efficiency, food and beverage companies have lower profit margins and limited resources. It is impractical for such companies to develop the same investment capital available like Google or Amazon would do. The costs of AI are not cheap, and leading technology companies spend more than $650 million annually to create such resources. Paired with consumer demands for faster, more affordable, and more easily accessible food options, the use of AI in the food and beverage supply chain can seem impossible.
However, the benefits of using such technologies to fuel stronger profit margins, realizing the potential health impacts of more traceability, improving inventory management, and other benefits can help food supply chain leaders make the tough decisions and build the business case for investing in these innovative technologies now. In fact, the North American food and beverage market possesses an AI-adoption rate of approximately 29.1%, and that statistic was from 2017. The industry is ready for change, and the functional constraints that would lead to most to assume AI and AR are unrealistic for the industry form the very benefits possible through the introduction of such technologies in this sector.
Major Grocers Look to AI to Boost Profitability and Lower Risk
A global supply chain survey found 84% of chief supply chain officers recognize a “lack of visibility” as the biggest challenge they face. Comparable to manufacturers, food supply chains need an infusion of AI, analytics, and blockchain to improve visibility, boost profitability, and lower risks. Improved visibility is essential to minimizing disruption, and combined with the power of AI, more visibility can allow replenishment systems to run on their own, self-optimizing ordering processes, connecting with consumers to move more foods from shelf to table, and understanding where risks reside.
AI-Guided Systems Enable Inventory Optimization of the Food Supply Chain
Fresh foods are problematic for grocers. Fresh foods do not have a stamped on expiration date, and variety in seasonal availability can influence consumers’ purchasing decisions. The result is the same; retailers throw away approximately 8 million tons of food annually, many of which result from spoilage before the sale. The economic loss is not much better, totaling more than $18 billion annually. The solution lies in improving inventory management of fresh foods. AI-guided inventory management systems could leverage point-of-sale (POS) data, information collected from consumers’ social media accounts, marketing data, and other sources to refine fresh food replenishment and stocking.
AI Helps Companies Predict Demands Based on Various Factors
Going back to the discussion on the use of AI and AR for inventory optimization, the use of these technologies help food supply chain leaders better plan for demand. While this involves inventory management, it also goes a long way in predicting potential disruptions, such as the more recent outbreak of the coronavirus. While the coronavirus represents a problem for manufacturers, consumers around the globe will look to the food supply chain with suspicion. Remember, food and beverages are what we eat and drink, and that is the easiest method to contract an illness. Thus, even when a potential health concern does not necessarily affect the farm-to-fork supply chain in the U.S., U.S. food and beverage supply chains must ensure disruption-free operations and cut off the opportunity for such health threats to contribute to distrust. In a sense, this is the consumer confidence-building aspect of AI that merges with inventory optimization. Ongoing improvements within inventory management and better demand planning reduce waste, help supply chain leaders avoid unnecessary risks, and reassure customers of food and beverage safety. AI and AR enable those capabilities.
Automated Traceability Builds Customer Confidence in the Supply Chain
Grocers across the US experienced a strong increase in criticism and demands for more transparency over recent years. The current processes and technologies in place do a poor job of allowing for true traceability from farm to fork, and AI combined with blockchain can provide the immutable data needed and proof required of the world’s major food supply chains to guarantee safety, quality, and consumer confidence.
AR-enabled glasses could help farmworkers identify fruits and vegetables when they are ripe. The same technology could connect to blockchain-based systems to create an unchangeable record of origin. AI-guided systems could use the information gathered from this point to compare food availability to incoming grocer and restaurant orders. It is an ecosystem of automation and continuous improvement.
Final Thoughts on the Food Supply Chain and AI Going Forward in 2020
The food supply chain is under constant attack from risks, including the spread of bacteria and food-borne illnesses, uncertainty regarding weather, political influences, and more. Regardless, leaders of the food supply chain must work to mitigate these risks and ensure the world can still eat safely tomorrow and well into the future. By using AI and AR, food chains can finally attain a little slice of peace of mind and avoid major disruptions. In addition, AI and AR will continue to advance and offer new opportunities to improve food supply chain management and end-to-end visibility.