Why Apparel, Footwear Brands Can’t Ignore AI in Sourcing
As artificial intelligence (AI) expertise becomes more of a demand in the hiring process for supply chain companies, one research firm believes the key to boosting overall business performance is infusing more AI-savvy talent into their sourcing departments.
According to an analysis of LinkedIn jobs across 66,000 supply chain posts by membership-based research and insights company Zero100, the five companies recruiting the most for digital skills are seeing revenue growth nearly double (1.7 times more) compared to the almost 170 other companies studied.
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On top of that, the top performers’ margins are 13.5 times higher than the rest of the pack, illustrating that AI’s value in sourcing can drive profitability as well, according to Lauren Acoba, principal researcher at Zero100.
“We have a hypothesis that improved use of AI in sourcing drives performance metrics for companies, and we are seeing that is true in spades,” Acoba told Sourcing Journal. “If you think about sourcing’s role, in a lot of ways securing supply through partnerships is being enabled by AI now in a new way and driving value for the company.’
The hypothesis stems from a company that focuses on leveraging data-driven insights to help chief supply chain officers and their teams decarbonize the supply chain. Zero100 collaborates with companies like Nike, Puma and Unilever in an effort to bolster digital supply chain transformation across their business—all while aiming to eliminate carbon entirely.
Two of Acoba’s predictions for 2024 expect an increase in the number of employees who can bring AI expertise into a business.
She said that 10 percent of supply chain professionals will list generative AI as a skill in their LinkedIn profile, while another one-third of all supply chain job postings will require creative problem-solving alongside AI and machine learning (ML) experience.
“We’re seeing that leaders on digital recruiting are also recruiting for soft skills at a higher rate,” Acoba said. “There are more translatable skills across IT and supply chain then I think we’ve realized in the past. That is new with generative AI, where you don’t necessarily have to have the foundational machine learning, software engineering skills, and required in many cases for supply chain professionals. From a generative AI standpoint, it’s really about: do you understand enough about what the tool can do, and do you have the skills to be able to prompt the tool to give the right output that you need?”
According to Acoba, a good practice for companies would include taking a traditional IT product manager role, and adding in the specific supply chain capabilities to that role. This way, companies can mesh baseline IT skills with supply chain problem-solving skills.
Apparel and footwear still fall behind in AI adoption
Apparel and footwear companies lag others when it comes to bringing AI-related skills into their supply chain, particularly when it comes to sourcing. According to the LinkedIn analysis, just 2 percent of these firms have listed AI/ML-related digital skills in sourcing job posts, below food and drug (3.4 percent), pharmaceuticals (3 percent), CPGs (3 percent) and technology (3 percent) among others.
The analysis observed that 25 percent of 174 companies across all industries mentioned AI/ML-related purchasing skills within their job posts, while 24 percent mentioned master data management and 18 percent cited risk management.
But for the apparel and footwear companies tracked, none mention purchasing skills, while 5 percent put master data management and risk management in their job posting.
“They’re a little bit behind in terms of adoption of AI/ML, or investment, if we think about hiring as a proxy for investment or focus on digital strategy,” Acoba said. “There’s a big opportunity for apparel and footwear companies to start adopting AI in relation to these other functional activities of sourcing teams.”
Apparel and footwear brands are surpassing other sectors in contract lifecycle management, where 5 percent post job skills with those responsibilities, compared to just 2 percent of everyone else.
Acoba called contract lifecycle management “a really good use case” for many apparel and footwear brands to start with.
“A lot of companies are using AI tools in contract lifecycle management to generate new contracts, where they can train models on the different commercial clauses they have in contracts, payment terms and regulatory requirements,” Acoba said.
She noted that existing deals can be amended more easily as well.
“Do 10 percent of your suppliers have payment terms that haven’t been updated?” Acoba asked. “There’s a lot of low-hanging fruit and value to be claimed not just in the efficiency for sourcing professionals in writing contracts and getting them out more quickly, but also in the back end of being able to manage supplier performance compliance and savings opportunities.”
