DRIVING INNOVATION AND OPERATIONAL EFFICIENCY: THE ROLE OF AI IN STRATEGIC SOURCING AND PRODUCT DEVELOPMENT

Abstract

This paper investigates the current markets that are becoming more volatile and globalized, and which have put organisations in a continuous struggle to come up with new services and products quickly, but at the same time ensuring high quality and cost effectiveness in their operations. The study examines how Artificial Intelligence (AI) could be strategically utilized in strategic sourcing and new product development (NPD) as it has a transformative role in the innovation capacity, competitiveness, and operational performance. Supply chain interruptions, volatile costs and untrustworthy suppliers have threatened the innovation speed and competitiveness of organizations. These have been caused by the fact that market dynamics are becoming increasingly unpredictable and complex and therefore require more resilient and intelligent methods of sourcing and product development. In this study the mixed method was used, which included interviews with experts, and secondary data analysis to investigate how the use of AI positively affects sourcing efficiency, supplier reliability, and innovation performance. Early reports point to the fact that the technologies based on AI have considerable positive effects on the information-driven decision-making process, cost control, and material quality during the procurement process. The developments do not only make the procurement more efficient but also allow quicker and more successful NPD cycles. Furthermore, AI also enables organizations to have real-time view and dynamic responses, which can help eliminate supply chain disruptions and maintain business continuity.  The study can add value to the domains of supply chain management, innovation, and strategic sourcing because it shows that AI integration helps to develop theory and practice. The approach and findings are useful to manufacturing, FMCG, and high-tech corporations that want to take advantage of AI as a source of innovation, operational excellence, and market competitiveness in a more uncertain business climate.