How to adapt your supply chain for AI-driven hyper-personalization

As businesses navigate a post-pandemic landscape, supply chains must become more agile and finely tuned to individual customer needs.

In brief

• Supply chains must stay agile post-pandemic to capitalize on trends in health, wellness and product-as-a-service models that meet consumer demands.
• AI can enhance supply chain agility and hyper-personalization by leveraging real-time data for customized products and improved consumer experiences.
• With 39% of supply chain leaders expecting autonomy by 2030, leveraging AI for real-time decision-making and efficiency is essential.

COVID-19 acted as a seismic force, reshaping global supply chains and revealing deep-seated vulnerabilities that many organizations had long ignored. The pandemic accelerated trends that were already in motion, such as digital transformation, the rise of e-commerce, hyper-personalization strategies, and the demand for greater transparency and sustainability in supply chain practices.

While we have learned valuable lessons from the pandemic, there is still much work to be done as we enter a new frontier characterized by rapid technological advancements with artificial intelligence (AI) and shifting consumer expectations. In this changing environment, organizations must respond to a variety of factors, including rapidly evolving consumer preferences, geopolitical shifts and advancements in technology. Global supply chains have transformed from mere operational frameworks to essential components to deliver customer needs.

For example, the ability to leverage transient trends — such as the increasing interest in health and wellness products, especially personalized DNA-based supplements and customized therapies — has become crucial. Furthermore, the transition to product-as-a-service models, such as subscription services for self-driving features in electric vehicles, underscores the need for supply chains to facilitate more than just production and distribution. These automobiles now demand continuous upgrades and maintenance to sustain vehicle performance, requiring a more agile and responsive supply chain approach.

1. Harness the power of digital transformation: Organizations must lay a strong foundation for automation by strategically investing in robust data infrastructures and advanced technologies like agentic AI and digital twins. These innovations can significantly transform global supply chains by enhancing communication and collaboration within the organization and throughout the supplier ecosystem. Additionally, AI can facilitate advanced forecasting and inventory optimization, leading to improved demand forecasting and inventory management.

Historically, technology has played a crucial role in supporting integrated business planning and enhancing forecast accuracy. However, as we introduce new product categories with limited historical data and see an increase in the variety of SKUs (such as mango-kiwi, strawberry-passion fruit, energy drinks and probiotic beverages), along with rising consumer expectations for hyper-personalization and shorter lead times, accurately forecasting demand becomes increasingly challenging. To navigate this complexity, organizations must leverage technology effectively to ensure precision in their forecasting efforts.

Where possible, moving computation and decision-making to the edge can also provide enterprises with greater agility. Implementing edge devices such as IoT (Internet of Things) sensors, gateways and edge servers that can process data locally will enable organizations to handle data collection, processing and analytics at the source. This may require a rethink of existing data architecture and associated one- to three-year IT investment strategies to capitalize on never-ending streams of data and support personalized consumer experiences.

2. Rethink operating models and risk: Persistent trade tensions and tariff fluctuations have significant implications for global supply chain strategies. Organizations must comprehensively re-evaluate their operating models, emphasizing the importance of network optimization to enhance responsiveness to shifting consumer demands.

Incorporating scenario planning and robust risk management frameworks will enable organizations to proactively identify potential disruptions and develop contingency plans. By leveraging AI-driven insights, businesses can not only anticipate market trends but also tailor their offerings to meet specific consumer preferences. This agility allows for rapid adjustments in supply chain operations, facilitating the delivery of customized products and experiences that resonate with individual customers. It is essential to cultivate resilient global supply chains that can adapt and respond effectively to ongoing and future disruptions, facilitating long-term sustainability and success while supporting advanced strategies for consumer engagement.

3. Emphasize processes as the foundation for technological advancement: Establishing standardized processes and a culture of continuous improvement is crucial for successful technology integration, particularly in the context of AI-driven strategies. Well-defined processes can amplify the advantages of technological investments, ensuring sustainable growth and efficiency in the new frontier of global supply chain management while enabling tailored solutions that meet individual consumer needs.

A structured approach to process improvement should begin with a comprehensive assessment of current operations, followed by the design of customized frameworks that incorporate advanced technologies. This allows organizations to harness AI capabilities to analyze consumer behavior and preferences, facilitating the development of offerings that resonate on a personal level.

Successful transformation relies on effective change management, fostering a culture of adaptability and equipping employees to navigate new processes seamlessly. Establishing mechanisms for continuous improvement and leveraging digital tools will be crucial for organizations to remain responsive to shifting market dynamics and to effectively implement hyper-personalization strategies that enhance customer engagement.

4. Cultivate an engaging environment for the digitally native workforce: Creating dynamic and stimulating supply chain roles is imperative to attract and retain a digitally savvy workforce, particularly for Gen Z employees who seek meaningful and engaging career paths. By showcasing the innovative aspects of global supply chain management and emphasizing opportunities for growth and impact, organizations can make these careers more appealing. Moreover, equipping employees with the skills to leverage AI technologies will empower them to contribute to ongoing efforts to make supply chains more responsive and tailored for service delivery.

Extensive training initiatives, including cross-training and exposure to transformative technologies like generative AI, should be promoted to boost productivity and innovation in the face of evolving challenges. This focus on skill development not only enhances operational efficiency but also enables frontline workers to play a crucial role in understanding and responding to consumer preferences, ultimately driving the success of personalization strategies within the supply chain.

5. Embrace autonomous supply chains: According to EY research, 39% of supply chain executives anticipate that their supply chains will be mostly autonomous by 2030. Organizations should plan for autonomy that can make real-time decisions, self-correct disruptions and optimize operations without manual input, all while enhancing customer satisfaction. Incorporating AI-driven predictive planning will enable the collection of sensor data from across the entire global supply chain network, allowing for quicker responses to consumer needs.

Implementing lights-out supply chains and end-to-end supply chain planning can improve operational efficiency and responsiveness, so customer demands are met promptly. Embracing drones, autonomous vehicles and humanoids in warehouses can further streamline operations and enhance service delivery. This shift will require a focused upskilling plan for organizations in the next three to five years to prepare for a future where customer centricity is at the heart of autonomous supply chains.