Hershey Implements AI in Its Supply Chain Operations

Artificial intelligence is moving beyond software and further into the physical side of business. Companies in food production and logistics are starting to use data systems to support day-to-day decisions, not just long-term planning. This shift is evident in The Hershey Company’s latest strategy update. At its Investor Day, the company announced plans to use AI in its operations, from sourcing analytics to plant automation and fulfillment, with a focus on how the business runs behind the scenes.

Hershey plans to apply AI to sourcing and fulfillment, which includes using data to guide how ingredients are purchased and how products are distributed. In its Investor Day materials, the company stated that it aims to build “a faster, smarter, and more resilient supply chain powered by automation and AI-enabled decision making.” Supply chains in the food and snack markets are under constant pressure: costs can change rapidly, demand can fluctuate by season, market, or product category, and retailers still expect goods to arrive on time and in the correct mix.

Hershey noted that its digital planning tools are designed to connect different parts of the business. The company stated that these systems are intended to reduce waste and improve inventory levels. It also mentioned that digital operational planning can link data in the supply chain and help raise service levels.

Part of Hershey’s update includes the use of the phrase “AI-enabled decision-making.” The company said its approach will link sourcing and delivery more closely and plans to use automated fulfillment systems for custom assortments and to improve speed to market. This is a useful way to interpret strategy. A challenging task is turning data into decisions that help operations move faster or with fewer mistakes.

This is where AI is starting to play a bigger role, according to Hershey. The value comes from how operations are interconnected. The changes also extend into manufacturing. Hershey stated it will increase plant automation to improve manufacturing efficiency and use AI in more parts of its operating model. What is changing is how AI fits into those systems. Instead of being separate from production, it is becoming part of the process used to guide planning and support execution.

This may help companies improve planning and respond more quickly when conditions change. In a business where input costs and consumer demand can change frequently, even small gains in timing can matter. Food and snack companies deal with constant fluctuations in input costs and demand. Ingredients like cocoa and sugar are affected by weather, trade flows, and supply issues. Companies still need to keep factories running and products moving through retail channels.

Hershey’s plan to use sourcing analytics is one example of how AI may be applied in that context. By analyzing supplier data and market trends, the company can improve how it purchases raw materials and manages risk. The company also expressed a desire to better connect workers in its operations. This suggests that the strategy is not solely about automation but also about coordination within the business.

Hershey plans to “incorporate AI in every stage of its operations,” including sourcing analytics and worker connectivity, as well as automated fulfillment and plant automation. This positions the company as a useful case study for broader changes in enterprise AI. Firms are moving away from narrow pilots toward broader use in business functions. In this model, AI is treated as part of supply and delivery systems.

CEO Kirk Tanner framed the plan around growth and execution, stating, “The strategy is clear. The team is ready. The next chapter of growth and leading performance starts now.” Such changes are likely to spread as more companies seek ways to connect data with operational decisions. Hershey’s strategy illustrates how AI is beginning to play a larger role in industries built on physical goods.