The most recent holiday season was a critical period for businesses, especially those in retail, manufacturing and logistics. As consumer demand surged, the pressure on supply chains increased exponentially. And with it came the heightened risk of supply chain disruptions.

As they enter the new year, businesses need to be preparing for the next holiday rush. Artificial intelligence can help.

AI-powered technologies help companies predict and respond to potential crises before they impact the business. Most disruptions are insidious and happen deep within the supply chain, making it extremely challenging to mitigate after the fact. AI and other emerging technologies are stepping up to transforming supply chain management by enhancing visibility, improving decision-making, and optimizing processes.

Foreseeing Demand Fluctuations

One of the most common challenges during any holiday season is unpredictability of demand. Consumers frequently change purchasing behavior based on market trends, promotions and unforeseen circumstances such as economic shifts or geopolitical events. Predicting these fluctuations is a significant challenge, but AI-driven predictive analytics can help businesses prepare.

AI algorithms analyze historical data, market trends and real-time information to forecast demand patterns with higher accuracy. With the help of machine learning, businesses can anticipate spikes in demand for specific products and adjust inventory levels and production schedules accordingly. For instance, retailers can use AI to predict which products will experience the highest demand, and ensure these items are prioritized in their warehouses and supply chains. 

Enhancing Inventory Management

Proper inventory management during the holiday season is critical. By implementing AI to optimize stock levels and rotation, businesses can achieve balanced inventories in advance of peak demand.

AI technologies continuously analyze sales data, inventory levels and external factors such as weather, market conditions and transportation availability. Machine learning models optimize stock levels, determining when to reorder products and in what quantities. Additionally, AI systems can detect and eliminate inefficiencies in the supply chain that may lead to slow inventory turnover or unnecessary delays.

Real-time monitoring using AI can ensure that any discrepancies, such as delayed shipments or damaged goods, are identified and addressed promptly. This level of visibility will minimize disruptions and help businesses maintain smooth operations during the 2025 season.

Streamlining Logistics With AI Optimization

As shipment volume increases, so does the complexity of managing transportation and deliveries. By implementing AI ahead of time, organizations can optimize routes, predict delays and improve the overall efficiency of the delivery process, well before the holidays.

AI-driven transportation management systems can calculate the most efficient delivery routes based on factors such as traffic, weather conditions and road closures. AI can suggest alternative routes for drivers or provide up-to-the-minute updates on estimated delivery times.

Moreover, AI can optimize warehouse operations, ensuring that goods are efficiently picked, packed and shipped. Automated systems reduce human error and ensure faster processing times in fulfillment centers.

Using AI for Risk Management

The 2024 holiday season showed us that disruptions can come from many sources, from weather events to labor strikes to supply shortages.

Machine learning models can process vast amounts of data from various sources, including historical weather patterns, geopolitical events, and supplier performance metrics, to predict potential disruptions. By analyzing these factors, AI can help companies identify vulnerabilities in their supply chain and take preemptive measures.

Companies that are behind in implementing AI for risk management in 2024 need to get the ball rolling now, to ensure that they’re ready for next year. The technology can alert businesses to potential delays caused by port congestion, or identify which suppliers may face capacity constraints. Armed with this information, businesses can proactively shift to alternative suppliers or transportation routes to ensure that critical goods reach their destinations on time.

AI-driven risk management also allows businesses to make smarter decisions when allocating resources. By simulating various scenarios, AI can suggest optimal actions to minimize the impact of disruptions.

Improving the Customer Experience

Customer expectations of fast and reliable order fulfillment were higher than ever during the 2024 holiday season. This year will be no different. AI-enhanced customer experiences can separate organizations from their competition by providing personalized recommendations, tracking order status in real-time, and responding to customer inquiries promptly.

AI-powered chatbots can handle customer inquiries and provide updates on order statuses, freeing up customer service teams to focus on more complex issues. AI systems also enable businesses to offer personalized promotions and product recommendations based on previous shopping behaviors.

Moreover, AI can analyze buyer feedback and detect emerging trends, enabling businesses to adjust operations quickly in line with changing customer expectations.

Aiming for Real-Time Visibility

The complexity of modern supply chains, with multiple stakeholders across different geographies, can make it difficult to maintain a clear, real-time view of operations. AI-driven systems can help provide businesses with comprehensive, real-time visibility into the entire supply chain, from production to delivery.

AI platforms integrate data from suppliers, logistics providers, warehouses and customer-facing systems to offer a holistic view of the supply chain. Real-time insights can help businesses optimize decision-making during the 2025 holiday season, whether it’s adjusting inventory levels, rerouting deliveries, or negotiating with suppliers to meet urgent demand.

Last year’s holiday season showed us is that AI is no longer just a futuristic concept — it’s a critical tool for modern supply chain management. By harnessing the power of AI in 2025, businesses can continue to optimize inventory management, streamline logistics, mitigate risks, and enhance customer experiences — all of which are essential to avoiding holiday season disruptions next year and beyond.

Mark Morley is senior director of product marketing for business network with OpenText.