IBM and SAP Collaborate to Elevate CPG and Retail Industries

IBM and SAP, two global technology leaders, have joined forces in a strategic collaboration to pioneer innovative solutions aimed at transforming the consumer packaged goods (CPG) and retail industries. This groundbreaking initiative, announced on January 11, 2024, leverages generative artificial intelligence (generative AI) to enhance supply chain management, finance operations, sales, and services for clients in these sectors.

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Building on their shared legacy of technology expertise, the two companies have integrated IBM WatsonX—an enterprise-ready AI and data platform, along with AI assistants—into SAP solutions. The collaboration seeks to develop both generative and traditional AI solutions tailored to address the complexities of the direct store delivery business process and product portfolio management. 

IBM Consulting and SAP are actively engaging with CPG clients globally to gather detailed requirements, ensuring the creation of secure and scalable AI solutions. These solutions will seamlessly integrate with SAP Direct Distribution®, aiming to provide substantial benefits in managing store-level assortments, improving product distribution, and driving incremental revenue.

Key objectives of the new solutions include:

  1. Enhancing Transportation Planning and Execution: IBM plans to integrate external data such as weather, traffic, and local events into the SAP Direct Distribution solution. Applying AI, this initiative aims to identify optimal store delivery routes, reducing costs, and minimizing carbon footprints.
  2.   Optimizing Store-Level Assortments: Utilizing AI and generative AI, IBM intends to develop store-level assortments based on market dynamics, prior sales patterns, anticipated demand, and current product mix. The goal is to provide specific product recommendations, maximizing sales while minimizing waste.
  3.   Automating Order Settlement: Addressing the complexities of direct store delivery, IBM and SAP plan to develop solutions leveraging automation and intelligent workflows. This approach aims to enhance operational efficiencies and increase settlement accuracy with the incorporation of AI in the last mile distribution component for SAP Direct Distribution.

Luq Niazi, Global Managing Partner at IBM Consulting, highlighted the significance of this collaboration, emphasizing the need for advanced insights to improve operations and meet customer expectations in the consumer industry.

IBM Consulting, with over 21,000 data and AI professionals, is poised to accelerate clients' business transformations with enterprise-grade AI. IBM's open and collaborative ecosystem approach allows clients to choose the right models and architecture, facilitating optimal solutions.

As a leading provider of global hybrid cloud and AI, IBM's breakthrough innovations, combined with SAP's industry-specific expertise, promise to deliver transformative options for clients in more than 175 countries. This collaboration reinforces both companies' commitment to trust, transparency, responsibility, inclusivity, and service, marking a significant step towards shaping the future of CPG and retail industries through generative AI solutions.