Artificial Intelligence is getting a lot of buzz as companies are grappling with a skilled labor shortage and dealing with ever-changing customer demands.
Gartner defines AI as a technology that applies advanced analysis and logic-based techniques, including machine learning (ML), to interpret events, support and automate decisions, and take action.
With its distinctive capabilities, including managing day-to-day repetitive tasks and freeing you up to focus on more important things, AI has quickly gained momentum in the supply chain and logistics market.
The market of AI in supply chain and logistics will reach $12 billion in 2027.
However, Shippers’ rising demands have provoked the logistics and supply chain realm to explore more intelligent technologies to solve common supply chain issues.
What are Common Supply Chain Issues?
- Hard to identify the possible impacts after supply disruptions and changes in demand.
- Automating administrative tasks and manual paperwork.
- Forecasting the accurate customer demand aftermarket changes.
- Careless warehouse management.
- Unreliable weather forecasting results in a waste of time, fuel, and money.
- Absence of advanced image recognition systems that define product conditions and manufacturing processes.
Despite being plagued with inefficiencies, we can expect that the supply chain and logistics industry can carry through high levels of efficiency and speed — progressing for the upswing with cutting-edge AI, ML, and automation.
Let’s have a detailed look at the role of AI in supply chain and logistics.
What’s AI in Supply Chain and Logistics?
AI optimizes supply chains and logistics around the world.
Supply chain executives were already on the way to digitizing and modernizing the system, but the covid-19 pandemic also came along the way. Fortunately, the system got more agile and resilient after the pandemic. And now, every other supply chain system is investing in AI to increase the supply chain processes’ visibility, cut costs, pick intelligent insights, and automate the whole management process.
Research by McKinsey found that early adopters of AI supply chain solutions experienced a 15% reduction in logistics costs.
Adding to that, AI lets you automate communication with virtual assistants. These digital assistants develop a more robust communication system between supply-chain teams and the customer-supplier chain.
AI in supply chain systems is not limited to this one application. Businesses can streamline planning, procurement, manufacturing, warehousing, distribution, transportation, and sales with AI’s various applications.
Why is AI Important in the Supply Chain Ecosystem?
AI has the potential to look into the future.
Companies that have successfully used AI for their supply chain systems further use it to see into the future. They already take steps to bolster supply before shortage befalls—and—cut down the inventory before demand drops.
Results of A Mckinsey study stated that:
AI-enabled supply chain management systems have improved logistics cost by 15%, inventory levels by 35%, and service levels by 65%.
Right now, AI’s most anticipated role in the supply chain realm is prioritizing optimal actions and testing various scenarios to plan the best course of action.
Nevertheless, supply chain systems can use AI in a variety of ways. Scroll down to know them in detail.
Popular Applications of AI in Supply Chain and Logistics
Here’s the list of various AI applications in supply chain and logistics.
For companies that deal with millions of items and manage complex logistics and supply chain operations daily, automated warehouses, undoubtedly, are the best solution for them.
The e-commerce giant Amazon has invested heavily in warehouse automation for a decade. It has launched roaming robots in its warehouses that can detect, select and handle single products in inventory. The robotic arm uses all-powerful AI and computer vision to recognize and manage millions of items, according to Amazon.
Moreover, AI-driven warehouses can simplify complex procedures and speed up logistics workflows. It can significantly reduce the need and cost for warehouse staff.
Driverless Delivery Vehicles
AI-powered transportation has been holding the stage in the logistics market.
Crewless cars and trucks can immensely benefit the logistics and supply chain field. It will reduce the risk of on-road accidents, eliminate skill shortage, and enhance fuel economy.
Fully autonomous vehicles can drop the operating costs up to 45%.
Spearheading autonomous vehicles, Apple and Amazon both have gained driving patents over the last few years for the smooth operations of their businesses.
Optimizing the Routes
AI helps you keep a look at existing routing and lets you track route optimization. The AI-based system can use digital and satellite maps and traffic insights to optimize routes, helping reduce shipping costs.
One of the logistics market leaders, UPS, uses an AI-driven route optimization system known as ORION (On-Road Integrated Optimization and Navigation). The system reduces driver miles by an average of eight per day. According to UPS, it feeds optimized route details to drivers, saving a further two-to-four miles on average.
Intelligent Inventory Management
The most challenging thing in the supply chain and logistics world is to maintain “optimum stock levels” and skip out on “out of stock” and “overstocking” issues. Such issues bring zero revenue.
To master the art of inventory management, you can use AI and ML principles. These principles outperform the manual methods while offering highly accurate, demand-based predictions.
Do you know that AI-powered demand forecasting can reduce supply chain errors by 30 to 40 percent.
With AI, supply chain and logistics forecasting gives you data-driven operations and helps you keep optimum stock levels.
When human error befalls, defective products are overlooked, leaving customers unhappy. It reflects poorly on your business reputation and can cost you money.
AI in supply chain and logistics help you inspect defects and control product quality. Not only does it accelerate the process, but it also improves accuracy. Digital processing techniques, image classification, image segmentation, and computer vision can spot defects the human eye can’t catch at first sight.
Yield optimization offers you to check the performance levels of various inventory areas. You can precisely understand the crucial elements of inventory areas, further exploiting them to maximize efficiency and boost revenue.
Traditionally, you spend a lot of time placing a common query about an order or shipment. still trying to get a satisfying answer. To simplify operations, businesses are adopting the latest customer support technology: Chatbots.
Also known as virtual assistants, these chatbots oust the hassle of swirling between departments, addressing your simple and complex queries. They maintain a perfect front-end and back-end communication system.
Whether you need to track cargo, keep track of product inventory, or want to keep up with CRM, meetings, or warehouse schedules, chatbot integration has you covered.
Since machine learning can detect patterns and fetch valuable insights within data, it has also become an integral part of AI in the supply chain and logistics field. With this amazing capability, ML helps planning delivery and logistics.
When fed enough data, the ML algorithms can precisely forecast bottlenecks in delivery routes while suggesting alternative ways. These ahead-of-time forecasts ensure that your delivery commitments stay in place.
Secured Supply Chain
When daily operations within the supply chain go unchecked or overlooked, the system becomes the most vulnerable. However, a sharp eye on every part of the process through automation can tweak security.
Real-time monitoring of the whole supply chain can help you understand the exact location of products. AI’s data analysis offers better insights into the logistics and supply chain. It prevents the products from theft and counterfeits.
Moreover, you can even track the bulk of supplier shipments at a time and close the communication gap between vendor and company.
Human workforces alone wouldn’t be able to sift through the big data in logistics and make sense of it. But AI and machine learning can. ML algorithms gather and analyze data about assets and warn you when something might go wrong, like demand fluctuations or vehicle breaking down. You can use these predictive details to take precautionary steps before the storm hits.
Industry Examples of AI in Supply Chains
Since logistic players around the globe struggle with supply chain disruptions, here’s a list of top-notch logistics companies leveraging cutting-edge Artificial intelligence to knock out supply chain challenges.
1. DHL Logistics and supply chain
The German logistic giant DHL has introduced its largest-ever autonomous forklift. These forklifts take over the picking, put-away, and stuffing of products. Moreover, these automated forklifts help DHL in managing labor shortages.
According to DHL, they have already experienced increased operational efficiencies and safe working standards in the warehouses with forklifts.
2. GXO Logistics Inc.
The world’s largest logistics provider GXO joined forces with Korber Supply Chain to develop the pioneering Operator Eye. It’s an AI-powered monitoring solution that tracks errors in the picking process and minimizes downtime and human intervention.
The thing that made Operator Eye stand out is that it resets the machinery, improving overall availability and performance.
Moreover, GXO uses Operator Eye’s data-capture element to scrutinize and improve operations and customer services. For example, it identifies problematic package designs and helps suppliers revise them for faster handling.
3. FedEx Supply Chain
In collaboration with Dorabot, a leading robotics solution provider for logistics, FedEx launched an AI-powered Sorting Robot, “DoraSorter.” The one-of-its-kind sorting robot drives smart logistic operations by helping FedEx sort bulk of cross-border e-commerce shipments.
The uniqueness of DoraSorter lies in its amazing capability to carry up to 10 Kgs of packages at approximately 40m per square, covering up to 100 destinations simultaneously.
HAVI builds flexible supply chain systems and creates pathways that support a sustainable future.
Combining operational excellence and digital analytics, HAVI helps you manage the supply chain process, collect and analyze data, enhance planning, improve decision-making, streamline routine tasks and speed communications.
5. Echo Global Logistics
With its quickly adaptable and scalable technology, Echo optimizes transportation and logistics needs through AI-powered portals. It lets customers ship their goods quickly and safely. These Portals are integrated into supply chain systems and ensure better data collection and transmission, seamless communication, and real-time visibility.
Perks of AI-powered Supply Chain and Logistics
Artificial intelligence is soaring in popularity. In fact, Gartner predicts that by 2023, 50% of IT leaders will move their AI projects from proof of concept to maturity.
If you are considering automating your business’s supply chains, here are the core benefits of AI in supply chain and logistics that could help you take your business to new heights.
Workforce planning involves a lot of processes. Recruiting, retention, training, performance assessment, etc. ML and AI solutions can simplify the procedures helping you make an efficient workflow strategy.
Intelligent supply chain networks help you gain visibility to late-breaking supply disruptions or demand blips. It offers the information you need to work through issues in real-time.
If the supplier fails to meet customer demands, the money and time invested go in vain. The supplier will lose potential customers too. AI takes the edge off with its fascinating predictive capabilities. It tells you about the sneaking risks so you can react accordingly. Also, it predicts the upcoming customer demands, which influences your whole business strategy for good.
If you do not deliver products on time, your profitability will suffer. Using AI in the supply chain and logistics assists you in demand forecasting and can lead to better shipping control. Artificial intelligence offers you real-time details of shipment tracking and delivery schedules. It factors in the customer’s locations to deliver the products and the time it takes to ship them.
Better Customer Services
AI has taken the customer service experience to a whole new level. Being a logistic player, you can improve the relationship with your customers by catering to their shipment queries instantly via chatbots and delivering their products on time.
Moreover, you can keep in touch by notifying them about new products and suggesting similar products.
These benefits clearly explain how much AI can make a breakthrough impact on the supply chain industry. From paring down costs to optimizing operations, it can help your business outpace the competition.
What’s the Future of AI in Logistics?
AI truly has the potential to transform any supply chain, and in today’s world, such transformation isn’t an option anymore. With the right combination of processes and technology, companies need to stop piloting AI and start scaling it so the supply chain network can realize its full potential value both in the short and long term.
If you want to embrace emerging technologies to transform your transport, logistics, and supply chain management business, Get in touch with us!