In a recent webinar hosted by Supply Chain Dive, industry experts gathered to discuss how specialized AI is transforming supply chain management and why traditional approaches no longer suffice in today's dynamic environment. The panel featured Matt McKinney (CEO and Co-founder of Loop), Kevin Donnelly (President and COO of Paravel Luggage), and Taylor Lucas (VP of Finance at Passport).
The challenge: Why traditional supply chains fall short
Today's supply chain landscape is marked by unprecedented unpredictability. As Matt McKinney pointed out, "The only thing that's predictable in supply chain today is unpredictability." Companies must navigate various disruptions, from COVID-19 to geopolitical issues, tariffs, and labor strikes.
Traditional supply chain approaches often rely on:
- Disconnected data both internally and externally
- Manual systems that limit decision quality
- Outdated processes that can't quickly adapt to changes
The three key barriers: People, process, and systems
According to McKinney, while people are often open to experimenting with new processes, they're frequently held back by outdated systems. This creates a cycle where antiquated technology limits the advancement potential of both people and processes.
Kevin Donnelly shared a real-world example from Paravel:
We were caught in that vicious cycle. A lot of passion, a lot of hard work, but not a lot of strength across people, process, and systems. We were just surviving, not moving the needle.
The evolution of supply chain management
McKinney outlined four distinct stages of supply chain evolution:
- Supply Chain 1.0 (The Dark Ages)
- Characterized by pen and paper processes
- Paper checks and filing cabinets
- No connected data
- Supply Chain 2.0 (2005-2020)
- Introduction of cloud technology
- Digital transformation begins
- Still heavily reliant on manual workloads
- According to JP Morgan, 80% of invoices are still manually keyed in
- Supply Chain 3.0 (2020-Present)
- Emergence of large language models
- Connected data enabling automation
- Digital workflow automation
- Example: One client achieved 99% touchless invoice processing
- Supply Chain 4.0 (The Future)
- Complete workflow elimination through AI
- AI agents making and executing decisions
- Enhanced connectivity between organizations
- Predictive and proactive problem-solving
The role of specialized AI in supply chain
A key distinction emerged between general AI and specialized AI for supply chain applications. McKinney explained that while general AI (like ChatGPT) works well for simple tasks, enterprise use cases require specialized AI that understands industry-specific language and contexts.
Benefits of specialized AI in supply chain:
- Higher accuracy for mission-critical workflows
- Domain-specific training preventing costly errors
- Transparency and explainability in decision-making
- Ability to standardize and centralize messy data
Real-world impact
Companies implementing specialized AI are seeing significant results:
Paravel Luggage:
- Identified hidden costs in shipping strategies
- Discovered cheaper service levels often had higher total costs due to accessorial fees
- Enabled real-time decision-making capabilities
- Implemented in just two weeks
Passport:
- Accelerated financial close process by over a week
- Improved carrier relationship management
- Enhanced margin visibility
- Scaled operations without proportional headcount increase
Looking ahead: The future of supply chain
The experts shared several exciting developments on the horizon:
- Talent Transformation
- Supply chain roles becoming more strategic
- Shift from processors to analysts
- Increased attraction of top talent to the field
- National Security Integration
- Supply chain designated as critical infrastructure
- Increased focus on security and resilience
- Greater investment in technology and innovation
- Global Connectivity
- Closer connection between businesses and consumers globally
- Emergence of tech-driven partners
- More seamless international commerce
Key takeaway
The future of supply chain management lies in specialized AI that can understand and adapt to industry-specific challenges. As Kevin Donnelly summarized,
I've never been more excited about what's going on in this space. It's only going to leapfrog forward with the capabilities that are now being deployed.
Companies looking to stay competitive must evaluate their current systems and processes, understanding that the goal isn't just to automate existing workflows but to reimagine them entirely through the lens of specialized AI capabilities.
Watch webinar
