Agentic AI era begins: GenAI will surpass traditional AI in most supply chains areas

HFS’ recent survey showed that the anticipated increase in generative AI (GenAI) adoption reflects enterprises’ strategic pivot to leveraging AI for smarter, faster, and more adaptive supply chain management. While traditional technologies primarily focused on incremental process optimization, GenAI fundamentally reimagines workflows through its predictive and generative capabilities. In this DVP, we have outlined the top three areas expected to see significant growth in GenAI adoption over the next 24 months.

Transformative shift in demand forecasting, with projected adoption growth of +61%: This projected increase in GenAI adoption signals a profound shift in how enterprises are planning to approach demand forecasting. As organizations strive to better forecast, prepare for, and respond to market dynamics, GenAI’s advanced capabilities are becoming a critical enabler of this transformation.

GenAI’s ability to analyze vast datasets, recognize patterns, and make predictions will enable more accurate demand planning. For instance, integrating it with historical and real-time data can anticipate shifts in demand due to seasonality, economic trends, political disruptions, competitive activity, or any other unforeseen disruptions. This enhanced precision in demand planning allows businesses to optimize inventory, reduce waste, and improve responsiveness—the critical factors for thriving in dynamic and uncertain markets.

Supplier management to grow by 53%: Enterprises realize that adopting GenAI in supplier management can transform it from a reactive operational task into a proactive strategic function. As adoption continues to rise, GenAI enables organizations to strengthen supplier ecosystems by enhancing risk management, optimizing contracts, and driving agility in supply chains. By addressing inefficiencies and operational challenges, it provides deeper insights, automates processes, and enables predictive decision-making. These capabilities are especially valuable for industries reliant on complex, multi-tiered supply chains. This empowers businesses to build efficient, collaborative supplier ecosystems, ensuring seamless operations despite disruptions and driving long-term value.

Production planning: With adoption expected to grow significantly at 52%, enterprises are planning to adopt GenAI to optimize production planning. By dynamically adopting GenAI, they can optimize resource allocation, resolve bottlenecks, and dynamically adapt to disruptions. GenAI ensures real-time alignment of labor, machinery, and materials with demand, improving efficiency and minimizing idle time. Its predictive capabilities help businesses proactively address production delays and machine failures, ensuring seamless operations, reduced costs, and enhanced productivity.

However, for successful GenAI integration, enterprises should start with pilot projects to validate its potential. Ensuring high-quality data integration and seamless system alignment is crucial. Effective change management through workforce training and the use of key performance indicators (KPIs) such as equipment effectiveness and cost savings will help track and achieve tangible performance improvements.

The Bottom Line: Embracing GenAI strategically will help enterprises transform their organization’s supply chains into a source of competitive edge, fostering significant growth and innovation.

Enterprise leaders should continue identifying use cases aligned with their strategic priorities and accelerate their adoption of GenAI to remain competitive in an increasingly data-driven and automated world. This calls for value-driven action from service providers. Services providers must upskill their teams, deepen industry-specific expertise, and present a more consultative, value-driven engagement model to help enterprises meet their GenAI goals.