Supply chains are the backbone of global commerce, ensuring that goods flow seamlessly from manufacturers to consumers. Yet the COVID-19 pandemic exposed the fragility of these systems, especially in South Africa’s fast-moving consumer goods (FMCG) sector. Disruptions from border closures, volatile demand and logistical challenges highlighted an urgent need for transformation.

But the threat has not ended: geopolitical tensions, new regulations or an unexpected climate event could cause disruptions to supply and even result in reliable suppliers shutting down. Enter artificial intelligence (AI) and advanced information systems – the technologies redefining how supply chains recover, adapt and thrive.

Research by Wesley Niemann, a lecturer in the Faculty of Economic and Management Sciences at the University of Pretoria (UP), explores how AI and information systems can bolster supply chain resilience in South Africa’s FMCG industry. The study aims to understand which AI capabilities are most valuable and what drives their adoption in this industry. The investigation provides perspectives on how digital tools can mitigate disruptions and improve supply chain operations.

“The FMCG industry’s primary challenge lies in its vulnerability to disruptions,” Niemann says. “With products that have short shelf lives, managing inventory, forecasting demand and ensuring timely delivery are paramount. Disruptions, whether from global pandemics or natural disasters, can lead to overstocking or understocking – both costly errors.”

Globally, supply chain disruptions cost industries billions of dollars annually. In the FMCG sector, delays can lead to significant losses due to expired goods or unmet consumer demand. By adopting AI, South Africa’s FMCG industry can not only address local challenges but also set an example for other developing economies. With capabilities like real-time tracking, predictive analytics and automated decision-making, AI can redefine how supply chains operate worldwide.

“Retailers are in the early stages of adopting AI algorithms to forecast demand and optimise stock levels in real time,” Niemann says. “This reduces the risk of overstocking or understocking, particularly for products with short shelf lives. This capability allows retailers to adapt quickly to fluctuating demand, minimising waste and ensuring consistent availability of essential items. By analysing consumer behaviour and sales data, they can better anticipate demand, thereby reducing stock-outs and minimising waste.”

He adds that retailers and third-party logistics providers have incorporated AI-driven analytics to improve supply chain visibility and optimise route planning. This integration has resulted in reduced operational costs and better service delivery.

What sets this research apart?

While many studies explore supply chain resilience, few focus on the developing world, where digital transformation often faces significant barriers. This research fills that gap, offering practical insights tailored to South Africa’s unique context. Moreover, it emphasises the need for internal integration within firms and external collaboration with supply chain partners, an aspect often overlooked in similar studies. However, challenges remain.

“Many South African firms face digital skill gaps and high implementation costs,” Niemann says. “Addressing these barriers requires collaboration among industry, academia and government to create supportive policies and training programmes.”

He emphasises that AI and information systems are not just buzzwords; they are critical tools for building resilient supply chains.

“As South Africa’s FMCG sector continues to recover from the pandemic, embracing these technologies can ensure long-term sustainability and global competitiveness.”

This research serves as a call to action for businesses to invest in innovation and for policymakers to create an enabling environment for digital transformation. By leveraging AI’s potential, South Africa can turn its supply chain challenges into opportunities, setting the stage for a more resilient, efficient and equitable future.

This article was originally featured in the Re.Search Magazine. Check out issue 11 of the magazine here.