What’s Your Board Story on AI for Supply Chain in 2025?

AI is not a fad. In fact, in the two years since Chat GPT was released, C-level leadership roles specifying AI-related responsibilities have boomed by 428%. Top supply chain leaders should expect to be intensely grilled on their specific plans by boards of directors this year. If your story doesn’t impress, they’ll buy someone else’s, including activist investors with a mind to shake things up.

Start with the big picture.

Read Genesis – It Will Open Your Eyes

A new book blows the lid off the typical debate about what AI means to the world. Co-authored by Henry Kissinger, Eric Schmidt, and Craig Mundie, Genesis asks questions and posits answers that extend the scope of AI’s impact well past economics and society to include evolutionary biology, political power, and theology.

The authors offer some very dark scenarios, including “gangs or tribes” displacing national governments, Matrix-like “experience machines” replacing reality, and AI as “divine,” challenging established faiths. None of these hypotheticals are casually conceived, and all are avoidable if “human-machine partnerships” can be “governed by a modern and sustainable definition of human dignity.”

Much less apocalyptic, however, is the question of AI’s impact on closed loop supply chains. The authors dedicate an entire chapter to the topic of prosperity, correctly citing the potential for advances in labor productivity, supply visibility, and material design to create “a new age of abundance.” They even describe the planning core of this AI-enabled supply chain with shocking precision:

“Planning machines would need to combine the linguistic fluency of a large language model with the multivariate, multistep analyses employed by game-playing AIs – and transcend the abilities of both.”

The good news is that supply chain leaders’ AI mission boils down to designing and building the machinery “to generate a new baseline of human wealth and well-being.” In other words, closing the loop on sustainable, profitable business models in the physical world.

Big picture, AI can be the supply chain unlock that not only improves margins but also preserves our license to operate by solving for the long-term needs of humanity.

Pitch Productivity to Keep It Grounded

AI for supply chain is a great story, but the ROI must be understandable in terms of cost savings and lifetime customer value. The simplest way to land this message is to focus on how specific AI investments improve the productivity of labor, physical assets, relationship assets, and capital, which combine to reduce costs and keep customers happy.

For example, IKEA South Korea invested €11M in an AI-powered omnichannel fulfillment system that uses inventory in existing stores and custom-builds boxes for each order. The productivity impact cuts across labor efficiency, material efficiency, and real estate efficiency while offering faster and more reliable delivery to customers. Picking productivity rose eightfold with the new system, meaning it can pack 300 boxes per hour and fulfill 2,000 orders per day.

Another example is Hyundai's micro-factory for EVs in Singapore, controlled by AI. Specialized production cells (rather than production lines) allow over 50% of the manufacturing to be done by robots. Workers here are 2-3x more productive than in a traditional factory. Again, productivity impacts include not only labor but also capital since time to scale is dramatically shorter for this facility than a traditional auto plant.

Even mundane examples like purchasing from long-tail suppliers can offer big productivity gains. Walmart’s experience with Pactum AI negotiation chatbots, for instance, eliminates thousands of hours of work and improves the productivity of supplier relationships since most say they prefer dealing with the chatbot – cash savings for initial pilots was 3%, on average.

Values Matter

In a memoriam to their co-author Henry Kissinger, who died in 2023 at age 100, Schmidt and Mundie liken AI to the nuclear challenge that Mr Kissinger handled so deftly. His advice on AI, they say, is to keep in mind that “small groups of dedicated individuals can alter history by stepping in and manifesting their values.” 

Your AI for supply chain story should show that you know how transformational it can be and that your values as a practical leader ground the whole thing in everyday operational productivity.

Own your fate.