Transforming Retail Supply Chains: Sustainable Commerce with AI

Innovation in today’s retail environment is defined by access to technology that enhances operations and customer experiences more than any other single factor. Yet, the basics of an economically and environmentally sustainable business are still foundational, and supply chains are perhaps the biggest single factor in ensuring both. That’s why retailers are increasingly turning to tech-savvy third-party support to properly integrate supply chain solutions in a way that makes sense for their business goals.

Anyone in retail has heard the tech-driven change speech a thousand times. Saying the industry is evolving is like saying the sky is blue—of course it is. The real question is how it’s changing and what it means for your budget. Yet, AI does represent a sea change. This is not the release of a new software program or operating system. AI represents nothing less than another revolution in technology and communications. In the long run, it will become clear that it is bigger than the switch from (e.g.) DOS to Windows. It stands to transform the work of quite literally every professional and business. And it is advancing toward new capabilities faster than most can keep up. Yes, retail is changing. The real advantage goes to those who ride the AI wave, staying ahead in a future that’s anything but predictable. There are some things that are clear today, however, and one of them is how AI can transform one of the most difficult to manage—and yet deeply impactful—aspects of any business: supply chains.?

Supply Chain Challenges and Opportunities in 2025 With rising costs, managing supply chains is more critical than ever—especially as they grow more complex. Businesses are hunting for savings to pass on to budget-conscious consumers who are ready to switch brands for a better deal. Moreover, supply chains are responsible for the bulk of a business’s carbon footprint, and that footprint is located deep within those chains: some 60-90% of all of an operation’s emissions come from its supply chains. While good to know, it presents a challenge to businesses who have to navigate an overwhelming sense of complexity to make changes—and no business has total control over their suppliers.???

In a recent podcast, RETHINK Retail worked to understand these challenges—and potential solutions—together with Andrea Morgan, Chief Innovation Officer for Blue Yonder, a supply chain expert with over 25 years of experience leveraging technology to enhance operations.?

For her, one of the clearest lessons of the pandemic was the need for more resilient supply chains. The crisis highlighted the need for accurate inventory and deeply efficient returns management. Here, AI can step in and make the kind of detailed, multivariate analyses and granular adjustments that can affect such intensely complex systems as modern supply chains.

AI for End-to-End Supply Chain Transformation Morgan explains how AI can tailor return policies by item or customer, ensuring the right approach for each scenario—boosting both customer satisfaction and profitability. This directly ties into what makes omnichannel a powerful consumer strategy.

“You can use AI to identify ‘serial returners,’” Morgan notes, “so leadership can decide whether to personalize policies for these individuals or groups.”

Traditionally, this would require manual oversight or rigid algorithms that struggle to keep up with shifting behaviors. AI, on the other hand, continuously learns and adapts, refining policies in real time. And that’s not even counting sustainability, which is becoming increasingly tied to supply chain goals worldwide—pushed by both regulators and consumers. Businesses are realizing just how deeply emissions are embedded in their most critical supply chains—and how difficult they are to control. Morgan noted, “It's hard to currently talk about supply chain without sustainability attached to it, whether that's scope, emissions, or in my language, having a ‘view’ for about 10 years’ time. What do we need to do right now to make sure this business maintains its profitability over that kind of horizon?”

Optimizing a Few Billion Analyses at a Time

AI steps in, Morgan explains, by optimizing transportation for lower carbon emissions, helping reduce unnecessary waste and resource depletion, and generally improving profitability through inventory management that doesn’t duplicate efforts and create unnecessary shipments. What’s more, AI helps to ensure regulatory compliance at a time when that has never been more expensive or complex.?

By integrating AI across all major aspects of supply chain management from planning to execution to transportation optimization, billions of daily predictions and small adjustments such as the above can coalesce into genuine supply chain transformation.

Shifting toward a vision for the future of retail and AI, the possibilities are vast and, as such, a bit unknowable. Yet, Morgan is optimistic, seeing a future where value is delivered through technologies that can target consumer needs to a level that was simply not possible before while delivering measurable outcomes. Touching on Blue Yonder’s huge investments in this area, “It isn't just about delivering software,” she notes: “We all know that supply chains are tricky to get right, and the technology is sometimes hard to implement. We believe really strongly it isn't just about the best technology, but it's around having the right people to help and then driving and making sure that our customers are successful.”

To learn more, visit Blue Yonder’s Retail Planning & Category Management solutions here.?