The introduction of AI into everyday processes has created huge changes in how companies work. Automation has and will continue to take over low level tasks, leaving humans to manage more complex jobs. How does this affect the wider supply chain and what does it mean for businesses?
AI is one of the most talked-about and exciting tech developments in recent years. There are many notable AI-driven processes, including machine learning, deep learning, and natural language processing. The potential applications of those processes are almost endless. With other tech, such as quantum computingOpens a new window , AI puts far more power at firms’ fingertips.
McKinsey estimatesOpens a new window that artificial intelligence in supply chain management could add $1.3 trillion to the global economy in the next 20 years. How then is AI having such a profound impact on supply chain management? The answer is by making many supply chain management components more efficient.
AI can be – and is being – used at all stages of the supply chain. The following are five ways that AI is revolutionizing supply chain management.
1. Intelligent Warehousing & Inventory Management
For many companies, inventory management is a critical element of their supply chain. Warehouse management softwareOpens a new window has long provided crucial assistance in that regard. Without such software, businesses would struggle to organize and dispatch their inventory efficiently.
AI is now providing firms with an extra layer of support. Automated, intelligent warehousing lets companies use their storage space efficiently. Take Lineage Logistics, for example. The cold storage and logistics firm has transformed its warehousing with an AI algorithm.
Lineage’s patented algorithm forecasts when goods and orders will arrive and leave. That allows the firm to arrange their warehouse pallets with efficiency. Items soon to move can be stored in the most accessible area. Pallets that will be around a while can be kept out of the way. That ‘smart placement’ driven by AI has helped Lineage boost warehouse efficiency by as much as 20%.
That’s far from the only example of AI helping warehousing and inventory management. Many of the world’s leading ecommerce and delivery firms also leverage AI. Ocado, for instance, uses the tech to instruct its warehousing robots. The firm’s use of AI in the retail supply chain has earned its Andover warehouse the nickname of ‘The Hive’.
2. Streamlining Deliveries
Delivering the correct goods on time is one of the fundamentals of supply chain management. Efficient deliveries and transportation are vital to that task. Artificial intelligence-driven supply chain management makes it so much easier.
Vehicle telematics is a concept familiar to most firms with large delivery fleets. It refers to the use of GPS to track and record the movement of the vehicles in those fleets. Along with order management software, it’s how many firms keep track of deliveries.
Combining AI with telematics helps streamline deliveries and ensures the timely arrival of orders. AI-enabled machine learning analyzes and makes sense of all a firm’s telematics data. It’s then able to identify any patterns and draw conclusions about the firm’s delivery processes.
One high-profile example of this use of AI comes in the shape of UPS’s ORION tool. The delivery giant uses ORION to plot the most efficient routes for its fleet. According to UPS, if ORION saves each driver one mile per day for a year, it equates to a $50 million saving for the company.
3. Automated Analytics & Problem-Solving
You can’t overestimate the importance of supply chain management. To many firms, an effective supply chain is the difference between success or failure. It’s crucial, therefore, to ably monitor performance all along the chain. What’s even more essential is that problems are identified and solved in short order.
AI-powered supply chain assistants help to manage that process. One Network’s NEO is a notable example. These assistants gather data from across a company’s network. They then analyze and assess that data. In doing so, they can optimize processes, indetify problems, and solve them.
Running in real-time, AI-powered supply chain assistants use machine learning to ‘get smarter’. The more data they process and patterns they identify, the better they can handle information in the future.
The idea is that AI-driven assistants take the burden of tracking a supply chain away from your staff. Your staff can then concentrate on collaborationOpens a new window in other areas to improve efficiency.
4. Accurate Forecasting
Excellent inventory management and logistics are often about superior planning. Firms that are ahead of the curve can get a jump on their rivals. Along the supply chain, there are many areas where good forecasting can make a difference.
Predicting changing consumer demand is one example. If you can forecast when the needs of customers may change, you can make sure your supply chain will cope. Demand forecasting isn’t a new idea. AI, though, allows for a far higher level of accuracy.
AI networks and algorithms can handle enormous volume of data. They can track and measure every conceivable factor that may impact consumer demand. AI also allows for continuous adjustments to forecasts according to real-time data.
You can also improve customer experience thanks to more accurate forecasts via AI. In this case, we’re talking about the ability to forecast delivery times. AI algorithms can rapidly analyze production and logistics data. That keeps sales agents and customers better informed of delivery timescales.
5. Autonomous Vehicles
Not long ago a theme of science fiction, autonomous vehicles are now not far away. Major companies including Bosch and Google are very interested in the possibility. As and when AI-powered vehicles do arrive, they’ll have a profound impact on supply chain management.
Removing the need for drivers in a delivery fleet will impact both efficiency and cost. Firms won’t need to pay a team of drivers. Statutory breaks or time off the road will also not apply to vehicles without a human element. Trucks and vans could conceivably drive all day and all night.
If you think this all sounds a bit far-fetched, you can think again. Rolls Royce and Google have been working on autonomous shipping for more than two years. If AI-powered cargo ships come to fruition, it would mean replacing whole crews, not just a driver. The difference to a company’s wage bill and its bottom line could be extraordinary.
AI is the Present & the Future of Supply Chain Management
Perhaps excepting of the rollout of 5GOpens a new window , few tech advances have got people more excited than AI. The applications of artificial intelligence are widespread and game-changing. That’s never truer than in the area of supply chain management.
Artificial intelligence in supply chain management is revolutionizing the field. Intelligent warehousing, efficient deliveries, and accurate forecasts all combine to create superior logistics. Now that you know how AI can impact the supply chain, you also know how to take your business to the next level.
Nick Shaw is the Chief Revenue Officer (CRO) for leading retail Inventory management software provider Brightpearl and is responsible for Global Marketing, Sales and Alliances. Previously Nick was GM and Vice President of the EMEA Consumer business at Symantec.
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