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The use of augmented reality (AR) and virtual reality (VR) technology in supply chains has the potential to significantly boost profitability through increased efficiency, enhanced decision-making and streamlined processes. AR and VR can also enable enhanced training opportunities for suppliers’ employees by allowing them to practice complex tasks in virtual settings while avoiding the tying up of physical resources or requiring operational downtime. Furthermore, the integration of AR and VR in the supply chain not only enhances internal efficiencies but also creates substantial value for a supplier’s customers, providing them with improved transparency, reliability and overall service quality, enabling decisions in a virtual setting so orders can be placed quickly with a lower return rate.
In the areas of logistics and inventory management, AR and VR can help workers quickly locate products in warehouses, which speeds up order fulfilment. AR and VR can simulate supply chain processes to reveal bottlenecks and optimize logistics routes to lower transportation and storage costs, which often results in lower prices for customers.
Product development and prototyping benefit from VR’s ability to create virtual models, reducing the need for physical prototypes and accelerating product launches. VR helps suppliers develop and validate product designs more efficiently, resulting in faster launches of higher-quality products. This accelerated development cycle allows suppliers to bring better products to market at a quicker pace, aligning with customers’ demands for innovation and rapid availability. AR’s real-time inspection capabilities improve quality control, which minimizes costly recalls and waste. Additionally, AR and VR enhance customer experience by offering transparency across the supply chain, fostering customer trust and satisfaction.
However, legal risks arise with AR and VR use in the supply chain that suppliers must address to ensure secure, compliant operations that protect customer data and maintain trust. Data privacy and security are major concerns, as AR and VR platforms handle significant amounts of sensitive data. Increased cybersecurity-related risks associated with breaches could lead to regulatory liabilities under privacy laws such as the California Consumer Privacy Act (CCPA) and General Data Protection Regulation (GDPR). Intellectual property (IP) issues also may arise if the associated digital information is improperly used, potentially resulting in infringement claims or claims of other rights violations. Proper licensing and IP management are essential to avoid these potentially costly issues. Additionally, suppliers must consider product liability risks, as AR and VR systems used in operations must be reliable to prevent errors that could lead to customer dissatisfaction or even harm.
- AR and VR improve supply chain efficiency, lower costs and increase customer satisfaction, thereby increasing profitability
- Virtual training and AR-based quality control reduce errors and waste
- Key legal risks include data privacy, IP and compliance challenges, requiring careful management