AI knows what customers want, transforms supply chains

Zara, a Spain-based company is leading the competition in “fast fashion,” a term used to describe retailers that quickly create inexpensive clothing inspired by current fashion runways. Besides the company’s trendy look, their optimized supply chain largely drives customer satisfaction. Nada Sanders, D’Amore-McKim School of Business distinguished professor of supply chain management, conducts research that examines the impact of artificial intelligence on a company’s supply chain and how it relates to their success.

Zara’s supply chain enables the store to give customers what they want, when they want it. Rather than outsourcing most pieces of production, the company controls it. In addition, the store has substantial investment in artificial intelligence technology.

One example of the company’s technology-driven decision-making is the use of personal digital assistants to collect data on product preferences, in real time, from customers. This data is then processed by algorithms to make their supply chain more responsive and efficient.

“Seven-Eleven Japan has taken lessons from Zara, using technology to microsegment demand and to understand what customers want,” Sanders said. “They will literally reshuffle and change what the merchandising looks like in the course of one day, in one location, for different segments of customers

Although other companies are also implementing these changes, such as Uber and Amazon, the majority may not be embracing these tools because of slow implementation. Part of this problem, according to Sanders, lies in the fear of algorithms outstripping human intelligence. As visual analytics continues to grow in popularity, some of these issues can be remedied.

“People need to feel that their security, their jobs, and their success is not threatened, but that all these algorithms and technology will help them succeed,” Sanders said. “Human beings will sabotage the implementation if they don’t feel that it’s helpful to them.”

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