AI in Supply Chain: The Big Interview with Darcy MacClaren, CRO, SAP

We sit down with Darcy MacClaren, the esteemed Chief Revenue Officer of SAP Digital Supply Chain, to discuss the transformative power of Artificial Intelligence (AI) in the supply chain industry.

As businesses of all sizes grapple with the escalating demands of customers for swift, efficient, and transparent operations, the relevance of supply chain management has never been more crucial for C-suite executives. 

Darcy, a distinguished global leader with three decades of experience driving technological transformation in the supply chain arena, is at the forefront of integrating AI and data-driven technology to fortify supply chains.

Her insights shed light on AI’s immense potential to revolutionize the core of business operations, fostering resilience and efficiency. 

About Darcy MacClaren

Darcy MacClaren serves as Chief Revenue Officer of SAP Digital Supply Chain, overseeing the global supply chain business. She is also an active champion for women in the supply chain and a recognized thought leader.

Recently named in Fortune’s Broadsheet newsletter for and about the world’s most powerful women, Darcy has also been featured in Supply & Demand Chain Executive’s 2022 Women in Supply Chain and as a 2022 Supply Chain Pro to Know.

Darcy’s expertise has been cited in The Wall Street Journal, The Washington Post, Bloomberg Radio, Protocol, SupplyChainBrain, and Supply Chain Quarterly, among other supply chain outlets.

Key Takeaways 

AI Revolution in Supply Chains: Enhancing Efficiency and Resilience

Q: What emerging trends in AI are you seeing that are significantly impacting supply chain operations next year? 

A: AI has the potential to significantly improve supply chain efficiency and resilience for businesses across various industries. So, despite a lot of buzz about ChatGPT, there’s much more to AI than just open language models.

For example, supply chains use machine learning algorithms to predict demand, optimize inventory levels, reduce waste, and improve customer satisfaction. But there’s also an increased emphasis on developing robotics to automate tasks. And that’s everything from manufacturing to shipping and packaging, and it’s all about increasing speed and efficiency. 

The one area we know we have a ton of interest in from our customers is the concept of generative AI for automating highly configurable products. There’s a process in place to help you tailor your orders. And within that process, there’s a lot of opportunity for automation, where you could potentially use a bot on the build material for the automation.

From here, you can create larger, richer data sets to engineer the order to process and take it through your entire organization, which gives you the ability to scale. This is just one aspect in which we expect the technology to be able to evolve. 

How AI Is Transforming Supply Chain Accuracy

Q: How have you seen companies successfully integrate AI into their supply chains to enhance risk resilience and better prepare for any potential disruptions? 

A: We have seen a surge in supply chain technologies designed to help businesses strive to improve their visibility, agility, and risk resiliency in such a dynamic, uncertain environment.

AI will take supply chain resiliency to the next level by enhancing an organization’s ability to sense, recognize, and react to disruptions and unlock new opportunities in exciting ways by gathering information quickly and making decisions.

AI allows us to lock this whole new level of resiliency with connected data collaboration across the entire enterprise. But it must be relevant, reliable, and responsible to ensure it achieves the measure of business success outcomes that it’s looking for.

Integrating AI into every level of the supply chain network will unleash what I view as a hyper-predictive and efficient logistics organization and revolutionize the whole flow of goods from the factory floor to consumers’ hands.

Q: How do you see AI improving accuracy in the supply chain industry?

 A: I don’t know how old the “garbage in, garbage out” saying is, but with the massive amounts of data, it’s even more true now. AI can analyze vast volumes of data, understand relationships, provide visibility into operations, and support decision-making. 

Early adopters of this technology who have embedded AI in supply chain management have improved logistics costs by 15%. I have also seen inventory levels increase by 35% and service levels improve by 65%.

AI gives you improved visibility and faster insights, increasing production efficiency, streamlining, and detecting code and logging guides. 

From Data to Decisions: How AI Will Revolutionize Demand Forecasting

Q: How will AI transform demand planning forecasts in 2024?

A: We recently did a study with Oxford Economics, and a couple of crucial points emerged. One of them was a survey with a thousand supply chain executives from ten different countries and 18 industries. However, what came out was that most supply chain executives knew that they must adopt intelligent technologies like AI, and most companies had plans to do so.

In this specific area of demand planning, it has enormous benefits. As companies capture marketing data and the investments of tens of thousands of data points fed into a machine learning model, they can take all these massive amounts of data and create a forecast by country.

So, first of all, it decreases the time. It takes to assemble all this information to create a better, more accurate, more detailed forecast, and then they manage by exceptions. We’ve recently announced Joule, SAP’s new generative AI assistant, providing intelligent insights across the entire SAP portfolio. It includes procurement supply chain operations, and it can assist in areas such as inventory management, forecasting demand, improving your delivery, and ensuring overall supply chain efficiency.

Green Tech and Supply Chains: AI’s Impact on ESG Compliance

Q: Have you seen the growing demand for AI solutions focusing on ESG issues, particularly in supply chains?

A: Yes, in part of the study I mentioned earlier, Oxford Economics actually saw a correlation between leaders in the supply chain and sustainability leaders, so the two go hand in hand. It’s not just the tagline anymore. 

Regulatory bodies, your shareholders, customers, and employees want a sustainable company and a focus on ESG. As businesses recognize that the supply chain significantly contributes to their emissions, there is an opportunity and responsibility to measure and reduce their environmental impact. 

An organization’s supply chain can account for more than 90 percent of its greenhouse gas emissions – a huge number. So, considering most of these emissions are generated through sourcing spend management, it is one of the most effective areas organizations have to drive supply chain sustainability. 

For a resilient supply chain, our customers are facing increased pressures in the area of a transparent supply chain. Then, you have regulatory requirements like the upcoming Supply Chain Due Diligence Act in Germany, which means businesses must take responsibility for the actions of all their partners in the supply chain, both direct and indirect. 

It’s a critical area for SAP, not just because our customers want it. But it’s one of the essential components at SAP as a technology provider in making the world a better place through technology.

Q: Are there any predictions you would make about the evolution of AI and supply management?

A: I think we will witness a proliferation of productive AI-driven digital assistance across enterprise portfolios, and it will transform how businesses run. You allow the user to ask a question in plain language, receive the answer, and contextualize the response.

For example, imagine a company with a full truck yard and doesn’t know which to upload first. Now, a worker can ask a generative AI to read the manifest, understand it, and tell which trucks to unload first. 

These insights will lead to many improvements across the entire supply chain. For faster deliveries to reduce costs and set a standard for the global market responsiveness and competitiveness. 

For a longer audio version of this interview, visit Neil’s Tech Talks Podcast.