Amazon and Walmart: Use GenAI to reduce supplier costs

Amazon and Walmart are using GenAI technology to lower their suppliers' costs.

In their race for supremacy in retail, Amazon and Walmart are deploying generative artificial intelligence across their supply chains to reduce costs and increase profits.

Amazon recently detailed in a June 3 blog post how it is using AI on several of its sites to minimize returns through its “Project PI” model. This program, which acts like a detective by scanning products for defects before shipping, uses computer vision and generative AI to look at aspects like size and color, while identifying the root causes of problems to prevent future defects. Amazon plans to expand this technology to additional sites during the year.

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Dharmesh Mehta, Amazon's Vice President of Global Partner Sales Services, emphasized the goal of providing an optimal customer experience: “By using AI and product imaging in our operational facilities, we are in a position to effectively detect potentially faulty products and resolve these issues before they affect customers before they affect customers, our business partners, and the environment.”

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For its part, Walmart is integrating AI even earlier in its supply chain, in particular to automate negotiations with its suppliers using a chatbot developed by Pactum AI. This initiative significantly reduced negotiation times from weeks or months to just a few days, as explained Darren Carithers, executive vice president of international operations at Walmart.

According to the report PYMNTS Intelligence Whole Paycheck, Amazon maintains a lead over Walmart in terms of market share in various retail categories, capturing 10% of total consumer spending compared to 7.3% for Walmart.

These initiatives to integrate generative AI aim to reduce costs and improve profitability. In the first quarter of the year, Amazon reported a net profit of $10.4 billion, while Walmart reported a profit of $5.1 billion. As these businesses continue to deploy generative AI in their operations, these technological advancements are meant to boost operational efficiency and profitability.

According to the results of the “Working Capital Tracker®” of PYMNTS Intelligence, 84% of business leaders believe that generative AI will have a positive impact on their workforce.

In summary, Amazon and Walmart are actively using generative AI to optimize their supply chains, thereby reducing costs and strengthening their competitiveness in the retail sector.

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Source: PYMNTS