IBM and SAP use AI to streamline retail operations

  • January 23, 2024
  • Steve Rogerson

IBM is collaborating with SAP to help clients in the consumer-packaged goods (CPG) and retail industries enhance their supply chain, finance operations, sales and services using generative AI.

With a shared legacy of technology expertise and the completed work of embedding IBM WatsonX, an enterprise-ready AI and data platform and AI assistants, into SAP software, IBM is working with SAP to create generative and traditional AI options to address the complexities of the direct store delivery business process and product portfolio management. IBM and SAP are already working with CPG clients worldwide to gather detailed requirements to create secured and scalable AI that can be integrated with SAP Direct Distribution.

The goal is to help CPG companies, wholesale distributors and retailers more efficiently manage store-level assortments, improve product distribution and drive incremental revenue.

IBM plans to feed external data such as weather, traffic and local events into SAP Direct Distribution and apply AI to help CPG companies identify optimal store delivery routes with the aim of reducing costs and carbon footprints. Real-time updates could provide drivers with information to make on-the-fly changes based on local conditions.

IBM plans to apply AI and generative AI to develop store-level assortments based on the market dynamics of each store, prior sales patterns, anticipated demand and current product mix. The goal is to make product recommendations and include preliminary planning so enough products are added to the assortment to increase sales and reduce waste.

The complexities of direct store delivery can often prevent the automatic settlement of transactions. IBM will work with SAP to develop automation and intelligent workflows to deliver operational efficiencies proactively and help increase settlement accuracy based on the AI in the last-kilometre distribution component for SAP Direct Distribution.

“Global and regional consumer industry organisations must manage various commerce applications and need advanced insights to provide proactive recommendations that help improve operations and meet customer expectations,” said Luq Niazi from IBM Consulting. “With SAP, we are looking to build on the long-standing work of incorporating AI into SAP that can help enterprise clients achieve further business value.”

IBM Consulting plans to build these on the SAP BTP business technology platform ( and will integrate WatsonX ( through APIs. Warehouse planners, frontline delivery associates and client representatives can have an enriched user experience by using WatsonX Assistant to create chatbots using IBM’s conversational search capabilities.

“At SAP, we look forward to collaborating with IBM on this important initiative to help consumer goods companies transform their operations and improve their bottom line,” said EJ Kenney, senior vice president at SAP. “We understand the complexities that come with managing direct store delivery and, by leveraging the power of AI, we aim to help our customers better manage their last-mile distribution more effectively, minimise waste, improve customer satisfaction and achieve business value in today’s fast-paced consumer industry.”