In an article for Supply Chain 24/7, Bass, Berry & Sims attorneys Emily Burrows and Thad McBride provided guidance for companies on governance and human oversight when using artificial intelligence (AI) to manage procurement, logistics, compliance, and supplier management.
As AI evolves from support to decision-making to full automation of processes, companies face greater legal and compliance risks – and potential liability for decisions made by the AI on their behalf.
Rather than creating a single AI law, agencies such as the Federal Trade Commission have made clear that existing consumer protection laws still apply to AI-driven business decisions, meaning that using AI does not reduce an organization’s compliance responsibilities.
Emily and Thad recommended that high-risk activities using AI – such as approving suppliers, executing contracts, or making significant purchasing decisions – should include defined approval thresholds and human review. Organizations should also regularly test AI outputs to identify model drift, bias, or declining performance before problems spread through the supply chain.
“AI will continue to play a larger role in global supply chains, but accountability will remain with the businesses that use it,” said Emily and Thad. “Companies that pair AI with thoughtful governance, meaningful human oversight, and strong documentation will be better positioned to reduce risk while capturing the benefits of greater automation.”
The full article, “Supply Chain AI Needs More Than Automation. It Needs Guardrails,” was published by Supply Chain 24/7 on July 6 and is available online. The authors wish to thank summer associate Adley Ragan for her assistance with this article.