Nordstrom Deploys AI for Sourcing and Spend
Nordstrom is using AI to reengineer its sourcing and procurement strategies, aiming for better spend visibility and inventory accuracy. The retailer is focusing on modular AI services for dynamic supplier scoring and predictive demand planning. The strategy relies on real-time signals from edge devices in stores and warehouses.
- The AI is accessed through procurement intelligence software from Suplari, which provides Nordstrom with spend analytics and supplier data that would take hours to compile manually. This platform helps identify overly complex supplier relationships and single-sourcing risks by consolidating previously fragmented financial data. - Nordstrom's VP and Chief Procurement Officer, Karoline Dygas, is driving the AI adoption with a focus on speed and time saved in building sourcing category strategies and researching suppliers. Her future goal is to move from the current predictive AI, which forecasts demand based on historical data, to prescriptive AI that recommends specific actions. - This initiative is part of a broader shift led by Dygas since 2019 to move Nordstrom from a decentralized sourcing model to a centralized one, managing over $3.5 billion in annual indirect spend. Before implementing new AI tools, vendors must demonstrate strong data governance to prevent "hallucinations" or fabricated information. - In its warehouses, Nordstrom has deployed automation with partners like Attabotics and Tompkins Robotics, using autonomous robots to sort products and improve order fulfillment speed. This aligns with the strategy of using technology for low-value, repeatable logistics tasks to free up employees for higher-value customer interaction. - The company's broader technology strategy includes the use of RFID tags to improve inventory accuracy and speed of service, which serves as a foundational element for a more efficient supply chain and better customer experiences. - While heavily focused on procurement, Nordstrom's Director of AI for Digital and Merchandising, Katie Winterbottom, is also leading a team of data scientists and engineers to build next-generation personalization and recommendation systems using agentic architecture.
