The Healthcare and Life Science sector is currently facing numerous supply chain challenges arising from the shortage of materials, increased costs, and staff shortages due to the COVID-19 pandemic, wars, and other ongoing crises.

It is now more crucial than ever to address these challenges, and one way to do so is by utilising new technologies such as Artificial Intelligence (AI). Intelligent workflows have been shown to effectively assist supply chain managers, and by incorporating AI into the supply chain, it can be made more effective and reliable. The implementation of AI can lead to the creation of a digital supply chain that can automatically respond to any crisis based on the programmed control unit. For example, if inventory levels fall below a particular value, AI can perform predictive ordering by checking networked databases on prices, delivery terms and general terms and conditions. Once AI places an order, it can confirm with another AI by checking inventory and production capacity.

Metaverse technology can further improve the digital supply chain by using “Predictive Maintenance” which monitors the performance and condition of equipment and assets, reducing the chances of failure.

However, the adoption of AI technology calls for appropriate regulations to create a legal framework that ensures legal certainty: Who concludes the contract in an automated ordering process between two AI? Is the AI an ‘e-person’ with legal capacity? What is the content of the contract? These questions require clear answers as AI does not weigh divergences in the contract as an experienced lawyer would. It is even more concerning when AI makes incorrect declarations due to technical defects or programming errors.

To mitigate these issues, the European Union is currently developing an AI law to ensure that AI systems in the European Union are safe, transparent, traceable, non-discriminatory, and environmentally friendly. To prevent harmful consequences, the European Parliament advocates for the oversight of AI systems by humans instead of automated mechanisms. Furthermore, there is a strong effort of the European Parliament to establish a technology-neutral, unified approach to AI systems for application to future systems.

The legal framework could solve the legal uncertainties that may arise from the use of AI in the supply chain. In December 2023, the European Parliament reached a provisional agreement with the European Council on the AI Act. The agreed text will now have to be formally adopted by both the European Parliament and the European Council to become EU law.

Dr. Christoph von Burgsdorff, LL.M.
Luther Lawfirm, Partner
Industry Group Healthcare & Life Science

Luisa Kramer
Luther Lawfirm, Associate
Industry Group Healthcare & Life Science