An Assessment of the Impact of Artificial Intelligence (AI) on New Product Development (NPD) and Strategic Sourcing/Procurement

Abstract

Artificial intelligence (AI) has become one of the disruptive technologies in the Fast-Moving Consumer Goods (FMCG) industries, specifically new product development (NPD) and strategic sourcing/procurement. This paper examines how AI affects these two key business processes, based on data gathered on 300 employees in the industry working in 5 of the largest FMCG firms in the Delhi-NCR area. The research design consists of quantitative research that uses cross-sectional survey Product Designing in which purposive and quota sampling methods are taken to ensure that respondents of the two departments are well represented. The role of AI in improving product innovation and procurement efficiency was tested by applying statistical methods (regression analysis and structural equation modelling (SEM)) with the help of SPSS and AMOS software. The results indicate that AI plays a vital role in accelerating and enhancing the speed of the process of developing products, enhancing the selection of suppliers, optimising costs, and efficiency in general procurement. Furthermore, AI-based technologies are used to improve decision-making processes, automatize processes, and become innovative due to predictive analytics and generative Product Designing. The research also adds value to the existing literature by evidence of the transformational nature of AI in FMCG operations that can be a great contribution to industry players, policymakers, and developers of technologies alike. The future research can investigate how AI will affect the supply chain sustainability in the long term, what issues may occur during the integration, and what role it will play in the future.