AI Chatbots Enhance Sustainable Supply Chains in Indian SMEs

By Aryaman PattnayakReviewed by Susha Cheriyedath, M.Sc.Sep 17 2023

A recent study published in the journal Sustainability explores the potential of artificial intelligence (AI) chatbots to improve the sustainability of supply chains in small and medium manufacturing enterprises (SMEs). Utilizing survey data from Indian SME managers, the researchers developed and tested a model examining how adopting chatbots, directly and indirectly, enhances sustainable supply chain performance. The findings shed light on critical mechanisms through which chatbots can optimize operations, reduce costs, and mitigate environmental impact.

The Transformative Potential of AI Chatbots

In recent years, AI-powered chatbots have rapidly transformed customer service, marketing, and business processes across diverse industries. Within supply chain management, chatbots enable real-time communication, greater workflow efficiency, advanced data analytics, and highly personalized interactions. Chatbot adoption provides supply chains with increased visibility, transparency, resilience, responsiveness, and performance. However, academic research investigating chatbot implementation in manufacturing SME supply chains still needs to be improved, especially in emerging economy contexts like India.

To conceptualize the links between AI chatbot adoption and supply chain sustainability, the study grounds its framework in dynamic capability theory. This theory emphasizes firms’ capacity to continuously adapt their resources and competencies in order to address changing business environments and shifting consumer demands.

From this perspective, AI chatbots represent a new means of leveraging data and flexibly responding to uncertainties that manufacturing SMEs can integrate into their supply chain processes to generate real value. The researchers propose that adopting chatbots will directly enhance sustainable supply chain performance in SMEs. Additionally, they hypothesize indirect positive effects through chatbots improving supply chain visibility and innovation capability within SMEs.

Modeling the Impact of Chatbot Adoption Through SME Manager Surveys

To test the conceptual model, the researchers gathered survey questionnaire data from 246 managers at Indian manufacturing SMEs. Structural equation modeling analysis was then used to assess the hypothesized relationships between chatbot adoption and sustainable supply chain performance, including the mediating roles of supply chain visibility and innovation capability. The results supported a direct positive link between chatbots and improved sustainability. Chatbot adoption also strongly predicted gains in supply chain visibility and moderate increases in innovation capability. In turn, both visibility and innovation showed significant positive impacts on sustainability metrics. These relationships indicate indirect mediating effects; chatbots boost sustainability by enhancing visibility and innovation.

The findings suggest that a significant mechanism by which chatbots improve sustainable supply chain performance is significantly increased visibility. Chatbots enable transparency and timely identification of potential risks or bottlenecks by facilitating real-time data sharing, monitoring, and communication across supply chain partners. This allows SMEs to rapidly respond to emerging opportunities, optimize logistics and processes, and make better data-driven decisions aligned with sustainability goals. Of the two mediators in the conceptual framework, supply chain visibility exhibited the most substantial role in leveraging chatbots to achieve supply chain efficiency gains and environmental benefits.

Cultivating Innovation and Learning for Sustainable Practices

Although less potent than visibility, the analyses also indicated that chatbot adoption could foster innovation capability within manufacturing SMEs to a moderate degree. By automating specific manual tasks and communication processes, chatbots free up personnel and resources that organizations can strategically redirect toward innovation initiatives and experiments with sustainable practices. As this enhancement of dynamic capabilities occurs, overall gains for sustainable supply chain performance follow. While the mediating effect through innovation was weaker, chatbots’ potential to drive a culture of continuous improvement, learning, and exploration of emerging green solutions remains an actionable opportunity.

The research spotlights several priority areas for supply chain managers and SME leaders to activate chatbots’ potential as a valuable sustainability tool. 

First, promptly implement chatbots within supply chain workflows to increase transparency, enable real-time tracking, and enrich data-driven decision-making. Making rapid strides in visibility should be the initial goal. Second, managers can utilize chatbots to optimize processes, boost flexibility, and reduce wastage or redundancies, creating a more streamlined supply chain. Third, capacities unlocked via automating tasks through chatbots should be redirected toward experimenting with and implementing greener operational practices. Fourth, sustainable key performance indicators can be regularly measured and monitored using analytics automatically generated by chatbots. Finally, engaging employees in the process through change management strategies will be critical as AI systems become increasingly integrated into supply chain operations.

By embracing these focus areas, manufacturing SMEs can pave the way for chatbots to make substantive contributions to the triple bottom line – balancing positive social impact, environmental stewardship, and economic viability.

Future Outlook

The limitations of the present study point toward worthwhile avenues for future research to deepen understanding of chatbots’ role. Expanding the geographical scope beyond India would be valuable for enhancing the generalizability of the findings. Larger survey samples spanning diverse manufacturing SME sectors could uncover variations in chatbot adoption patterns and effects across different organizational contexts. Testing alternative theoretical lenses beyond dynamic capabilities may provide complementary or competing perspectives on AI integration in supply chains. Longitudinal data tracking impacts over time would also better establish causality.

As AI and Industry 4.0 technologies keep rapidly evolving, investigating implications for emerging applications like predictive analytics, blockchain-enabled supply chain coordination, and smart factories will be crucial. For now, this study makes a convincing case that chatbot adoption represents a high-potential pathway for manufacturing SMEs to realize more sustainable supply chain performance. Further leveraging AI alongside human ingenuity and stewardship will remain vital for supply chains to flourish while protecting people and the planet.