How SPS Commerce is using AI to reinforce retail supply chains

Having operated at the middle of retail supply chains for a long time, SPS Commerce Inc. is applying artificial intelligence to data compiled on trading partner transactions to generate demand forecasts, persona-based marketing, and other supply chain enhancements.

The corporate, which reported $536.9 million in 2023 revenue, up 19% from 2022, has 120,000 customers across 85 countries. Corporations using the SPS retail network include W.W. Grainger Inc., The Home Depot Inc. and Goal Corp.

“SPS sits in the midst of the transactions that occur in retail — including basic transactions like purchase orders, ship notices, invoices — all those things which can be key to allowing commerce to occur,” says Jason Popillion, director of technology, adding, “We even have things like inventory files in ancillary documents that show what inventory is obtainable available at any moment.”

“What we’re in a position to do with all that data — which is admittedly super interesting about AI — is dissect it and get evaluation done in ways in which we haven’t been in a position to do before.”

He adds: “Transactional data tell many stories in regards to the life and cycle of our economy, customer sentiment and buying habits … what products appear to be stronger in times of the yr, or how you may search for things in the approaching future.”

Popillion says SPS defined its data structure to make it more comprehensible by AI. “We create a schema that claims, ‘that is the information that we’re going to be working with; these are all of the pieces that we’ve available.’”

Consequently, “AI did a really, very, superb job of understanding the information” and produced useful machine learning evaluations related to provide chain operations, he adds.

SPS launched its AI technology in December and, in the primary 4 months of this yr, tested its effectiveness through pilot projects with some customers before making AI data results available this month to all customers.

Up to now, the corporate has found AI produces levels of efficiency, including speed and accuracy, ten times higher than non-AI methods for such efforts as making demand forecasts.

For instance, SPS used AI to predict order volumes for a future time period based on past order volumes over an prolonged time period.

“Should you’re attempting to take into consideration the way to plan for the upcoming holiday season, what we’re doing is the last two years and see what the information is showing us, to provide you an idea of what you may expect on this upcoming season.”

Other methods SPS is using with AI include:

• Faster onboarding of supplier product data. Using an in-house developed AI chat client tool, SPS is enabling its internal supply chain professionals to assist expedite commerce for retailers by more quickly and accurately compiling retailers’ requirements for onboarding merchants’ latest suppliers into the SPS retail network. “Once you’re attempting to get connectivity to your supplier base that’s feeding your commerce engine, the earlier you may get them on board, the earlier you may acknowledge the revenues from those suppliers,” Popillion says.,

• Customer personas. To assist retailers tailor marketing communications, SPS uses AI to customize marketing language to the needs of managers particularly roles in corporations, equivalent to director of sales, or who’ve communication preferences based on their U.S. location, equivalent to the East Coast or within the South or West.

Popillion, who’s a Certified Information Systems Security Skilled, says SPS has addressed security concerns many individuals have regarding AI by working with established AI technology providers Microsoft Corp. and Amazon Web Services and by setting data management standards.

“It’s all about data,” he says, “It’s about training individuals so that they know the way to use it effectively, and it’s about creating the fitting access policies to permit only [authorized] to have access to it.”

He adds that he’s noticed a shift in pondering amongst corporations concerning AI. As with the early days of the web, when corporations realized they might use the online to grow their businesses and make them more efficient, organizations realize AI offers practical ways to enhance business operations — for instance, possibly generating a requirement forecast in minutes as an alternative of hours.

For now, SPS is using its AI technology internally to offer value-added services to customers because it continues to develop it, Popillion says. But he adds that SPS also expects to introduce as early as later this yr AI applications that its customers will directly access and use.

Paul Demery is a Digital Commerce 360 contributing editor covering B2B digital commerce technology and strategy. [email protected].

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