AI Runs the Supply Chain, But Who Writes the Rules?

This blog was originally posted on 20th March, 2026. Further regulatory developments may have occurred after publication. To keep up-to-date with the latest compliance news, sign up to our newsletter.

AUTHORED BY CHELSEA NÍ CHUINNEAGÁIN, SENIOR REGULATORY COMPLIANCE SPECIALIST, COMPLIANCE & RISKS

Key Insight

AI is transforming how supply chains operate, making them faster, more efficient, and more responsive to change. However, the technology also raises questions about who sets the rules and decides how it is used. Understanding both its power and its limits is essential for businesses navigating this shift.

Want to find out more about global AI regulations? Check out our webinar-on-demand ‘AI Rules Are Changing: Key Regulatory Updates for 2025 & 2026’.

Introduction

AI is quietly but powerfully reshaping how companies manage everything from global supply chains to hiring and workforce planning. Algorithms don’t just crunch numbers anymore, they forecast demand, identify the best job candidates, schedule shifts, and optimize procurement in ways that far contrast from traditional methods.

Like in most areas where AI has become integrated as a core part of the process, the rules governing it aren’t consistent. The European Union has put forward a comprehensive regulatory framework, treating high-risk AI applications like hiring tools and employee monitoring as matters requiring strict oversight with their high risk designation.

The United States, by contrast, has taken a patchwork approach, with a mix of federal bills, sector-specific rules, and state-level legislation. For companies operating across borders, this divergence isn’t just a legal detail, it has a huge impact on strategy, supply chain management, and even how the AI itself is deployed in day-to-day operations.

EU: High Standards, High Risk & High Accountability

The EU’s Artificial Intelligence Act is the first law of its kind: it classifies AI systems by risk and sets strict requirements for “high-risk” tools. That includes anything involved in employment decisions, from automated hiring platforms to worker monitoring software.

If your AI system is considered high-risk, businesses are expected to keep detailed records of how it operates, ensure data is accurate and representative, build in human oversight, and be prepared for audits and transparency requests.

Breaches of the legislation can carry a hefty fine of €35 million or 7% of global revenue if you don’t comply and perhaps even more damaging that the monetary fine, is the reputational damage that comes along with the misuse of these systems, particularly in areas as nuanced as employment and supply chain management.

On top of that, GDPR gives employees the right to ask for human review of algorithmic decisions under Article 22 as well as transparency requirements for algorithmic management. A subsequent requirement to inform workers or representatives before deploying high-risk AI tools also exists alongside this. In Europe the general attitude is that AI can help, but humans remain responsible at the end of the day.

The EU approach is unique in that accountability extends across the entire supply chain. It doesn’t just apply to the company deploying the AI, it can apply to the developers, vendors, distributors and businesses using the tools. In practice this means that if your logistics software or procurement platform comes from an external provider, you’re responsible for ensuring it meets EU standards. Ergo, your AI compliance has become a supply-chain issue.

The US: A Patchwork Approach

The US does not have a single AI law like the EU AI Act. Instead, it relies on federal bills such as the proposed Artificial Intelligence Civil Rights Act, sector-specific regulations, and state or local laws. For example, New York City Local Law 144 requires companies to conduct bias audits of automated hiring systems, disclose the results, and notify applicants when AI is used in screening. This targeted, reactive approach encourages innovation but leaves companies navigating a fragmented and sometimes unpredictable legal landscape

US regulation tends to be reactive, addressing specific issues rather than creating a comprehensive framework. While this approach encourages innovation, it also leaves companies navigating a fragmented and sometimes unpredictable legal landscape.

AI and the Future of Global Supply Chains

AI is becoming central to how companies manage supply chains, workforce planning, and hiring. Businesses are using it to forecast demand, manage inventory, identify potential disruptions including those caused by global conflicts or geopolitical tensions, automate procurement, oversee logistics, and support recruiting and scheduling employees. As these systems become more sophisticated, regulators are paying closer attention to accountability, fairness, and transparency.

In Europe, the focus is on regulating the entire AI lifecycle, covering both providers and deployers. In the United States, rules are evolving gradually through a patchwork of federal and state legislation, with increasing attention on AI hiring tools and workforce management practices.

While AI can make supply chains more resilient and streamline hiring, it also introduces operational, ethical, and legal risks. Companies need to invest in internal governance, vendor oversight, bias audits, and regular compliance checks to ensure AI is used responsibly and can withstand scrutiny from regulators, employees, partners, and the public.

Key Takeaways for Businesses

Ensure AI systems used for supply chain management, workforce planning, and hiring are transparent, fair, and accountable.
Monitor potential disruptions from global conflicts or geopolitical risks when using AI for forecasting and procurement.
Implement internal governance and vendor oversight to track how AI tools are sourced and deployed.
Conduct bias audits and compliance checks for hiring and workforce management systems to prevent discrimination and maintain regulatory compliance.
Regularly review AI operations to manage operational, ethical, and legal risks and ensure systems can withstand scrutiny from regulators, employees, partners, and the public.

For further information on AI legislation across the globe, check out our guide ‘AI Rules Are Changing: Strategic Insights To Market Access and Mandatory Compliance in 2026‘.

Stay Ahead Of Regulatory Changes in AI

Want to stay ahead of regulatory developments in AI?

Accelerate your ability to achieve, maintain & expand market access for all products in global markets with C2P – your key to unlocking market access, trusted by more than 300 of the world’s leading brands.

C2P is an enterprise SaaS platform providing everything you need in one place to achieve your business objectives by proving compliance in over 195 countries.

C2P is purpose-built to be tailored to your specific needs with comprehensive capabilities that enable enterprise-wide management of regulations, standards, requirements and evidence.
Add-on packages help accelerate market access through use-case-specific solutions, global regulatory content, a global team of subject matter experts and professional services.

Accelerate time-to-market for products
Reduce non-compliance risks that impact your ability to meet business goals and cause reputational damage
Enable business continuity by digitizing your compliance process and building corporate memory
Improve efficiency and enable your team to focus on business critical initiatives rather than manual tasks
Save time with access to Compliance & Risks’ extensive Knowledge Partner network