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International Journal of Management & Entrepreneurship Research, Volume 6, Issue 5, May 2024

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International Journal of Management & Entrepreneurship Research
P-ISSN: 2664-3588, E-ISSN: 2664-3596
Volume 6, Issue 5, P.No.1607-1624, May 2024
DOI: 10.51594/ijmer.v6i5.1126
Fair East Publishers
Journal Homepage: www.fepbl.com/index.php/ijmer

Enhancing manufacturing productivity: A review of AI-Driven


supply chain management optimization and ERP systems
integration

Olubunmi Adeolu Adenekan1, Nko Okina Solomon2, Peter Simpa3, &


Scholar Chinenye Obasi4

1
Independent Telecommunications Engineer and Data Analyst, UK
2
Marshall University Huntington West Virginia.
US Department: Environmental Health and Safety, USA
3
Faculty of Science and Engineering, University of Hull, UK
4
University of South Wales, UK
___________________________________________________________________________
Corresponding Author: Olubunmi Adeolu Adenekan
Corresponding Author Email: adeoluadenekan47@gmail.com

Article Received: 25-01-24 Accepted: 05-04-24 Published: 12-05-24

Licensing Details: Author retains the right of this article. The article is distributed under the terms of
the Creative Commons Attribution-Non Commercial 4.0 License
(http://www.creativecommons.org/licences/by-nc/4.0/), which permits non-commercial use,
reproduction and distribution of the work without further permission provided the original work is
attributed as specified on the Journal open access page.
___________________________________________________________________________
ABSTRACT
This abstract delves into the realm of manufacturing productivity enhancement through the
review of AI-driven supply chain management (SCM) optimization and Enterprise Resource
Planning (ERP) systems integration. As industries strive for operational excellence, the
convergence of artificial intelligence (AI) and supply chain management emerges as a
transformative force in driving efficiency, agility, and competitiveness. Through a
comprehensive analysis, this abstract examines the synergistic relationship between AI-driven
SCM optimization and the integration of ERP systems, elucidating their collective impact on
manufacturing productivity. AI-driven SCM optimization encompasses a spectrum of
technologies and methodologies, including predictive analytics, machine learning, and
autonomous decision-making systems, aimed at optimizing various facets of the supply chain,
from demand forecasting and inventory management to production planning and logistics

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International Journal of Management & Entrepreneurship Research, Volume 6, Issue 5, May 2024

optimization. By harnessing the power of AI, manufacturers can enhance forecasting accuracy,
reduce lead times, optimize inventory levels, and mitigate supply chain disruptions, thereby
improving overall productivity and customer satisfaction. Integration of ERP systems plays a
complementary role in manufacturing productivity enhancement by providing a centralized
platform for data management, process automation, and cross-functional collaboration.
Through seamless integration with AI-driven SCM optimization tools, ERP systems enable
real-time data exchange, actionable insights, and end-to-end visibility across the supply chain,
facilitating informed decision-making and agile response to dynamic market conditions.
Drawing insights from case studies and industry examples, this abstract highlights best
practices, challenges, and emerging trends in AI-driven SCM optimization and ERP systems
integration. Strategies for successful implementation, including organizational readiness
assessment, change management, and stakeholder engagement, are discussed to guide
manufacturers in unlocking the full potential of these transformative technologies. In
conclusion, the convergence of AI-driven SCM optimization and ERP systems integration
offers a compelling pathway for enhancing manufacturing productivity, driving operational
excellence, and sustaining competitive advantage in the digital era..
Keywords: Artificial Intelligence, Supply Chain Management, Enterprise Resource Planning,
Manufacturing Productivity, AI Integration, Predictive Analytics.
___________________________________________________________________________
INTRODUCTION
Manufacturing productivity remains a cornerstone of economic growth and competitiveness in
the global market (Herman, 2016; Mehrotra, 2020; Ninduwezuor-Ehiobu et al., 2023). It
embodies the efficiency and effectiveness of transforming raw materials into finished goods, a
process increasingly reliant on sophisticated supply chain management (SCM) and Enterprise
Resource Planning (ERP) systems. SCM focuses on the oversight of materials, information, and
finances as they move from supplier to manufacturer to wholesaler to retailer to consumer
(Uduafemhe et al., 2023). On the other hand, ERP systems integrate core business processes,
including inventory and order management, accounting, human resources, and customer
relationship management, into a single system to streamline processes and information across
the organization (Kurbel, 2013; Lenny Koh, Saad, & Arunachalam, 2006). These systems form
the backbone of modern manufacturing operations, facilitating improved decision-making,
greater operational efficiency, and enhanced productivity (Ntuli et al., 2024).
Despite the critical role of SCM and ERP systems in modern manufacturing, several challenges
hinder their full potential in enhancing manufacturing productivity (Ewim et al., 2023). These
include the complexity of global supply chains, the dynamic nature of market demands, data
silos, and the integration of disparate systems and technologies. Moreover, traditional SCM and
ERP systems often lack the flexibility and adaptability required to respond to real-time changes
and disruptions in the supply chain, leading to inefficiencies, increased costs, and delayed
responses to market demands (Giannakis, Spanaki, & Dubey, 2019). The integration of SCM
and ERP systems also presents significant challenges, including data consistency,
interoperability, and the need for real-time data analytics and decision-making capabilities.
This paper aims to critically examine how integrating artificial intelligence (AI) into SCM and
ERP systems can address these challenges and significantly enhance manufacturing
productivity. AI-driven SCM optimization and ERP systems integration promises to bring about

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International Journal of Management & Entrepreneurship Research, Volume 6, Issue 5, May 2024

a new era of efficiency and effectiveness in manufacturing operations. By leveraging AI


technologies such as machine learning, natural language processing, and predictive analytics,
manufacturers can achieve greater visibility and control over their supply chains, improve
demand forecasting, streamline operations, and make more informed decisions (Ehimare et al.,
2023). This review will cover a broad spectrum of AI-driven innovations in SCM and ERP
systems integration, focusing on key areas such as demand forecasting, inventory management,
production planning, quality control, and customer relationship management. It will explore the
latest advancements in AI technologies and their applications in optimizing supply chain
operations and integrating ERP systems. The review will also explore the challenges and best
practices in implementing AI-driven solutions, drawing insights from recent case studies and
research findings.
The integration of AI into SCM and ERP systems holds significant promise for transforming
manufacturing productivity. By enabling more accurate demand forecasting, optimizing
inventory levels, improving supply chain visibility, and facilitating the seamless integration of
various business processes, AI-driven solutions can help manufacturers reduce waste, lower
costs, and respond more swiftly to market changes (Hassan, Wahab, & Nor, 2023; Javaid,
Haleem, Singh, & Suman, 2022). This review will provide valuable insights into the state-of-
the-art in AI-driven SCM optimization and ERP systems integration, highlighting the potential
benefits, challenges, and future directions in this rapidly evolving field (Suku et al., 2023).
Through a comprehensive examination of current trends and developments, this paper seeks to
contribute to the ongoing discourse on enhancing manufacturing productivity through
technological innovation, offering a roadmap for researchers, practitioners, and policymakers.
Theoretical Framework
Supply Chain Management (SCM)
Supply Chain Management (SCM) is a comprehensive approach to managing the flow of goods,
information, and finances, from the procurement of raw materials to the delivery of finished
products to the end consumer (Larson & Rogers, 1998; LeMay, Helms, Kimball, & McMahon,
2017). It encompasses various processes such as sourcing, production, logistics, and the
information systems needed to coordinate these processes. SCM is critical to manufacturing
productivity as it directly impacts the efficiency of production processes, the cost of goods sold,
and the ability to meet customer demand in a timely manner. Effective SCM enables
manufacturers to reduce waste, optimize resources, and adapt to market changes swiftly,
thereby maintaining a competitive edge in the global marketplace (Habib, 2011; A. Oyewole &
Adegbite, 2023; A. T. Oyewole, Okoye, Ofodile, & Ejairu, 2024; Van der Vorst, 2004).
Enterprise Resource Planning (ERP) Systems
Enterprise Resource Planning systems are integrated software platforms that combine essential
business processes and functions, including inventory and order management, accounting,
human resources, customer relationship management, and beyond (Gibson, Holland, & Light,
1999; Shehab, Sharp, Supramaniam, & Spedding, 2004). By centralizing data and automating
business processes, ERP systems improve data accuracy, facilitate better decision-making, and
enhance operational efficiency. ERP systems are instrumental in streamlining production
planning, managing supply chain activities, and improving collaboration across departments in
manufacturing operations. They allow for real-time visibility into operations, essential for

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International Journal of Management & Entrepreneurship Research, Volume 6, Issue 5, May 2024

optimizing productivity and responding to issues as they arise (Bahssas, AlBar, & Hoque, 2015;
Kumar & van Hillegersberg, 2000).
AI in SCM and ERP
Artificial Intelligence technologies, such as machine learning, predictive analytics, natural
language processing, and robotics, have the potential to significantly transform SCM and ERP
systems. AI can analyze large datasets to identify patterns, predict trends, and provide insights
that human operators might miss. In SCM, AI applications include demand forecasting,
inventory optimization, and logistics planning, enabling more accurate and efficient
management of supply chain activities. AI can automate routine tasks, enhance data analysis,
and improve decision-making processes within ERP systems (Fawole et al., 2023). For instance,
AI-powered analytics can forecast production needs, optimize resource allocation, and predict
maintenance requirements, thus increasing operational efficiency and reducing downtime
(Abrahams et al., 2024; Adewusi et al., 2024; Nyathani, Allam, & Engineer, 2023).
Integrating AI into SCM and ERP systems presents several challenges and barriers. Technical
challenges include the complexity of integrating AI technologies with existing IT infrastructure,
data quality issues, and the need for specialized skills to develop, implement, and manage AI
applications. Organizational challenges involve aligning AI initiatives with business goals,
managing change, and ensuring stakeholder buy-in (Orikpete and Ewim, 2023). Additionally,
there are significant data challenges, including ensuring data privacy, security, and compliance
with regulatory requirements. Overcoming these challenges requires a strategic approach to
technology integration, investment in skill development, and a focus on data management
practices (Godbole, 2023; Kunduru, 2023; Modupe et al., 2024; Obaigbena et al., 2024).
The integration of AI technologies into SCM and ERP systems represents a significant leap
forward in enhancing manufacturing productivity. By addressing the challenges associated with
this integration, manufacturers can unlock the full potential of AI to streamline operations,
reduce costs, and better meet customer demands (Wiggins et al., 2023). The theoretical
framework outlined here provides a foundation for understanding the critical role of SCM and
ERP in manufacturing and the transformative impact of AI technologies on these systems.
AI-Driven SCM Optimization
The application of Artificial Intelligence in Supply Chain Management (SCM) encompasses a
broad array of techniques designed to enhance the efficiency and effectiveness of supply chain
operations. Key AI techniques include (Helo & Hao, 2022; Min, 2010; Pournader, Ghaderi,
Hassanzadegan, & Fahimnia, 2021):
• Machine Learning (ML): ML algorithms analyze historical data to predict future trends,
enabling better demand forecasting, inventory management, and identification of supply
chain risks.
• Predictive Analytics: This technique uses data, statistical algorithms, and machine learning
to identify the likelihood of future outcomes based on historical data. It's particularly useful
in forecasting demand and improving supply chain resilience.
• Natural Language Processing (NLP): NLP enables computers to understand and interpret
human language, facilitating automated customer service and improved communication
within the supply chain.

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International Journal of Management & Entrepreneurship Research, Volume 6, Issue 5, May 2024

• Robotic Process Automation (RPA): RPA uses robots or AI workers to automate routine
and repetitive tasks, such as order processing and data entry, thereby increasing efficiency
and reducing errors.
• Internet of Things (IoT): IoT devices collect and exchange data in real-time, offering
unparalleled visibility across the supply chain. This data can monitor inventory levels, track
shipments, and optimize logistics.
Benefits of AI-Driven SCM Optimization
AI-driven SCM optimization offers numerous benefits that significantly enhance supply chain
efficiency, accuracy, and decision-making (Dash, McMurtrey, Rebman, & Kar, 2019; Fosso
Wamba, Queiroz, Guthrie, & Braganza, 2022; Singh, Rawat, Mittal, Kumar, & Bhatt, 2022):
• Improved Demand Forecasting: AI algorithms can analyze vast amounts of data to predict
demand more accurately, helping companies to align their production schedules and
inventory levels with market needs.
• Enhanced Inventory Management: AI provides insights into optimal stock levels, reducing
the risk of overstocking or stockouts and ensuring that inventory is aligned with demand
(Fetuga et al., 2023).
• Optimized Logistics: AI can optimize route planning for deliveries, taking into account
factors such as traffic conditions, weather, and fuel consumption, thereby reducing delivery
times and costs.
• Increased Efficiency and Productivity: By automating routine tasks, AI allows employees
to focus on more strategic activities, thus improving overall productivity.
• Better Decision-Making: With real-time data and predictive analytics, decision-makers can
anticipate problems and make informed decisions quickly, increasing the agility of the
supply chain.
Recent studies and developments in AI-driven SCM optimization highlight its growing impact
and potential. Research has shown significant improvements in demand forecasting accuracy
through advanced ML models that can handle complex, non-linear patterns in data (Blose et al.,
2023). Studies have documented the successful implementation of RPA in supply chains,
resulting in faster processing times, reduced errors, and lower operational costs. Recent
developments in IoT technology have enabled real-time tracking of goods, with research
indicating substantial improvements in inventory accuracy and logistics efficiency. Emerging
research is focusing on how AI can optimize supply chain sustainability by improving resource
efficiency and reducing waste (Carbonneau, Laframboise, & Vahidov, 2008; Feizabadi, 2022;
Seyedan & Mafakheri, 2020; Zohdi, Rafiee, Kayvanfar, & Salamiraad, 2022).
The integration of AI into SCM represents a transformative shift towards more intelligent,
responsive, and efficient supply chains. The current state of research underscores the potential
of AI to revolutionize supply chain operations, making them more adaptable to changing market
conditions and customer needs (Abolarin et al., 2023; Onyiriuka et al., 2023). As these
technologies continue to evolve, their adoption in SCM is expected to grow, offering new
opportunities for innovation and competitive advantage.

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International Journal of Management & Entrepreneurship Research, Volume 6, Issue 5, May 2024

AI Integration with ERP Systems


Challenges of Integrating AI with ERP
Integrating AI with Enterprise Resource Planning systems presents a set of unique challenges
that span technical, organizational, and data-related domains (Godbole, 2023; Goundar, Nayyar,
Maharaj, Ratnam, & Prasad, 2021):
• Technical Challenges: These include the complexity of integrating AI tools with existing
ERP systems, the need for substantial computational resources, and ensuring the
compatibility of AI models with the ERP software architecture.
• Organizational Challenges: Organizational resistance to change can hinder the integration
process. Employees may be skeptical about AI technologies or fear job displacement due to
automation. Moreover, there may be a lack of skilled personnel to effectively manage and
maintain AI systems.
• Data-Related Challenges: AI systems require large volumes of high-quality data to function
optimally. Ensuring data accuracy, consistency, and cleanliness can be a significant hurdle.
Additionally, integrating AI involves navigating issues of data privacy, security, and
compliance with regulations.
Strategies for Integration
Successfully integrating AI into ERP systems requires a strategic approach that addresses the
aforementioned challenges (Okoli, Obi, Adewusi, & Abrahams, 2024; Okoro, Oladeinde,
Akindote, Adegbite, & Abrahams, 2023; Oladeinde, Hassan, Farayola, Akindote, & Adegbite,
2023; Olatoye et al., 2024):
• Pilot Projects: Starting with small-scale pilot projects can help organizations test AI
integrations with minimal risk. This approach allows for the evaluation of technical
feasibility, organizational readiness, and potential ROI before a full-scale rollout.
• Skilling and Change Management: Implementing training programs to upskill employees
on AI and ERP integrations is crucial (Daniyan, 2023; Izuka et al., 2023). Equally important
is initiating change management practices to address fears and resistance, emphasizing AI's
value to employees' roles and the organization.
• Data Governance: Establishing robust data governance practices ensures that data feeding
into AI systems is accurate, consistent, and clean (Lochab et al., 2023; Muteba et al., 2023).
This involves setting up data management protocols, regular data audits, and ensuring
compliance with data protection regulations.
• Collaboration with AI and ERP Vendors: Working closely with vendors can provide access
to specialized expertise, helping to navigate technical challenges and ensuring that AI
solutions are compatible with existing ERP systems.
Examples of AI-ERP Integration
Several AI applications within ERP systems illustrate the potential of this integration to
transform business operations (Atadoga, Umoga, Lottu, & Sodiya, 2024; Azunna, 2018;
Mandvikar & Achanta, 2023; Priya, Rudra, Kandula, Teja, & Reddy, 2023):
• Intelligent Process Automation (IPA): AI-driven automation tools can streamline repetitive
tasks such as data entry, invoice processing, and order management, significantly reducing
manual effort and error rates.

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• Predictive Maintenance: AI can analyze data from machinery and equipment to predict
failures before they occur, scheduling maintenance only when necessary. This reduces
downtime and extends the lifespan of assets.
• Advanced Demand Forecasting: AI algorithms can process vast amounts of sales data,
market trends, and external factors (like weather or economic indicators) to forecast demand
more accurately (Popo-Olaniyan et al., 2022; Lottu et al., 2023). This enables better
inventory management, production planning, and resource allocation.
• Customer Service Chatbots: AI-powered chatbots integrated into ERP systems can handle
customer inquiries, orders, and support tickets, improving response times and customer
satisfaction.
The integration of AI with ERP systems offers significant opportunities to enhance data
analysis, automate processes, and improve overall operational efficiency (Orikpete et al., 2020;
Emeka-Okoli et al., 2024). While challenges exist, strategic approaches and successful
examples demonstrate the feasibility and benefits of this integration. As AI technologies
continue to evolve, their role in ERP systems is poised to become increasingly central, driving
innovations that can transform business operations.
CONCLUSION AND FUTURE DIRECTIONS
Conclusion
This review has explored the transformative potential of Artificial Intelligence in optimizing
Supply Chain Management (SCM) and integrating Enterprise Resource Planning systems to
enhance manufacturing productivity. Key insights include the identification of various AI
techniques such as machine learning, predictive analytics, and robotic process automation that
can significantly improve demand forecasting, inventory management, and logistics within
SCM. In the realm of ERP, AI integration promises to streamline processes, automate repetitive
tasks, and enhance decision-making through advanced data analysis. Despite the challenges
associated with integrating AI into SCM and ERP systems, including technical, organizational,
and data-related hurdles, strategic approaches and successful examples highlight the feasibility
and benefits of such integrations.
Integrating AI into SCM and ERP systems has profound implications for manufacturing
productivity. AI-driven SCM optimization can lead to more accurate demand forecasting,
reduced inventory costs, and improved supply chain agility. Meanwhile, AI-enhanced ERP
systems can automate and refine business processes, leading to significant efficiency gains.
These advancements enable manufacturers to respond more quickly to market changes, reduce
waste, and enhance overall competitiveness. The strategic integration of AI streamlines
operations and fosters innovation, paving the way for new business models and opportunities.
This review acknowledges several limitations. The scope of AI applications and their impact
on SCM and ERP systems is vast and rapidly evolving, making it challenging to capture all
recent advancements and their implications comprehensively. Additionally, the review focuses
on the positive aspects of AI integration, with less emphasis on the potential risks and ethical
considerations related to job displacement, data privacy, and security. Finally, the review draws
on available literature and case studies, which may not fully represent the diversity of
experiences and outcomes in different industries and geographic regions.

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International Journal of Management & Entrepreneurship Research, Volume 6, Issue 5, May 2024

Future Research Directions


Looking ahead, several areas warrant further research to fully leverage AI in SCM and ERP
systems:
• Future studies should explore AI integration's ethical, social, and employment-related
implications, developing frameworks to mitigate negative impacts while maximizing
benefits.
• Research should address the technical challenges of interoperability between AI
technologies and existing ERP systems, including the development of industry standards
and best practices.
• Investigating how AI can enhance the sustainability of supply chains and manufacturing
processes represents a vital research avenue, aligning with global efforts to achieve
environmental and social sustainability.
• Continuous exploration of emerging AI technologies and their applications in SCM and
ERP systems is essential. This includes quantum computing's potential impact on data
processing and decision-making and the integration of blockchain for enhanced
transparency and security.
In conclusion, the integration of AI into SCM and ERP systems offers a promising avenue for
enhancing manufacturing productivity. By addressing current limitations and focusing on future
research directions, there is significant potential to further revolutionize these systems, driving
efficiency, innovation, and sustainability in the manufacturing sector.

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