The global artificial intelligence in inventory management market was valued at US$ 1,670.3 Mn in 2018 and is expected to reach US$ XX Mn by the end of the forecast period, expanding at a CAGR of XX% during the forecast period. Several organizations across end-use industries have found it difficult to cope with rising operational costs, reducing sales, dissatisfied customers, and several such issues. In order to overcome such issues, the adoption of AI in inventory management has become imperative.
AI is equipped with computing techniques that help select and analyze large quantities of data collected from inventory management operations. Several organizations are focusing on digitizing their supply chain processes using AI. Augmenting the efficiency of supply chain operations is the key focus area for several organizations across end-use industries such as retail, automotive, and healthcare, among others. Owing to the penetration of artificial intelligence, many organizations are rapidly adopting this technology to ramp up their supply chain operations and thereby, increase profitability and reshape their businesses.
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The success of artificial intelligence in accelerating business processes has attracted significant investments as well. For instance, in 2018, the government of Quebec reportedly invested approximately US$ 60 Mn for supporting AI-enabled supply chain supercluster. In the same year, the Canadian government also invested approximately US$ 230 Mn for supporting AI-enabled supply chain supercluster. Such investments have greatly improved the supply chain operations of several organizations across end-use industries. Machine learning integrated into inventory management helps in warehouse management through predictive abilities that can forecast the future demand and supply appropriately. Integrating machine learning technologies in supply chain operations will help project the best possible scenarios based on intelligent algorithms and machine-enabled analysis of huge data sets.
Based on end-use industries, retail captured a fair chunk of the market in 2018 and is expected to display similar trends in the coming years as well. AI has made a stark difference in optimizing retail supply chain, as the need for fast delivery to shops and end-customers has intensified over the past few years. Artificial intelligence allows retailers to understand the proper operations of how their inventory is being managed, and it suggests improvements and reduces overhead costs and waste. Implementing artificial intelligence in inventory management functions could help retailers save approximately US$ 350 Bn annually. Further, the implementation of artificial intelligence has also resulted in a reduction in operational costs by about 35%.
The rapid adoption of artificial intelligence in inventory management in the retail sector is being driven by some external pressures. Retailers are adopting AI in their inventory management processes in order to retain their business. Faster delivery with the help of AI and machine learning technologies has become a major differentiating factor for winning businesses. This rapid adoption of AI in inventory management processes has led to several retailers offering same-day delivery, and more retailers are expected to come up with similar offers in the coming years.
For instance, in January 2020, SAS Institute announced the upgradation of its Intelligent Planning Suite, integrated with AI and cloud. The upgrade will allow companies optimize their inventory, automate the forecasting process, increase profits, and localize assortments. Leading retailers such as Carrefour S.A., and Grupo Exito rely on this platform provided by SAS for their inventory management requirements. For instance, demand planning is critical for Grupo Exito, as it influences business, from production to sales and staffing to inventory replenishment. For Group Exito, SAS analytics reduces and optimizes inventory, augments forecast accuracy and demand planning efficiency, and analyzes real-time demand datasets. The use of SAS analytics has allowed Grupo Exito to effectively manage huge datasets.
Global AI in Inventory Management Ecosystem
Based on regions, North America dominated the global market for AI in inventory management and is expected to display similar trends in the coming years as well. Asia Pacific is expected to display higher growth during the forecast period, with China, India, and Japan spearheading the growth of the market. China, for instance, is gearing itself to become the global superpower in artificial intelligence. AI is expected to upgrade and connect the entire country across all industries by 2025.
The implementation of AI will control companies and help produce goods while keeping the demand and supply gap in check. The retail industry in China is gearing up for a dramatic change as well. The industry is shifting towards a new concept known as ‘New Retail’, which is an amalgamation of online and offline retail. The integration of AI in ‘new retail’ in China will allow retailers to augment business efficiency and provide a much better shopping experience to the customers. These factors are expected to support the growth of the AI in inventory management market in China in the coming years.