November 06, 2020

AI in Logistics and Supply Chain: How It Helps in Coping with Latest Challenges

ai in logistics and supply chainThe entire process of the supply chain has been revolutionized in the last decade with advanced technologies. AI and machine learning (ML) are becoming the driving innovation strategies of businesses in logistics and supply chain. Algorithms gain more power with agile decisions like the Internet of Things (IoT), cloud computing, and predictive analytics.

Amounts of data, collected by warehousing and transportation systems, can be used for optimizing the goods delivery, balancing supply and demand. The potential of AI in logistics and supply chain allows the companies to track their operations, optimize supply chain planning, enhance supply chain management productivity, and scale business strategies.

To improve everything from process automation to greater visibility into integrated and real-time data, AI is used to better anticipate events, avoid risks, and create solutions. In simple words, if AI is the car, then machine learning is the engine.

Companies that do not significantly accelerate process times may be at a serious competitive disadvantage. The logistics industry has adopted AI mostly for 4 business functions which are service operations, product and service development, marketing and sales, and supply chain management.

The reports reveal that 36% of large-, mid-, and small-sized organizations have successfully adopted AI in their logistics and supply chain processes. 53% of companies reported increased revenues resulting from the introduction of AI and 61% reported a significant reduction in costs. Revenue from supply chain management was influenced by forecasting, sales and logistics network optimization.

ai increase in logistics

The deployment of AI has risen to 37 percent in 2019. Artificial intelligence is claimed to increase productivity by more than 40% by the year 2035. Logistics companies will generate $1.5 trillion per year in economic value by adopting AI into their processes.

Some of the leading companies that develop AI techniques are IBM Corporation, Microsoft Corporation, Google LLC, and Amazon.com, Inc. The other key players in the supply chain market are Intel Corporation, Oracle Corporation, Samsung, General Electric, Deutsche Post DHL Group, Micron Technology, Inc., FedEx Corporation.

AI-based solutions in logistics and supply chain offer supply chain planning, warehouse management, fleet management, consumer support, virtual assistant, risk management, inventory management.

The growth of AI has fundamentally changed many sectors in logistics and supply chain. Here are a few AI capabilities you can evaluate how they fit into a company’s operations.

Relationships with Customers

Virtual assistants help visitors navigate their search through different product possibilities. Chatbots can be applied to all transactions at B2B marketplaces to identify procurement requests and manage buyers’ expectations. Businesses can reduce consumer response time and also decrease the need for customer service executives.
Customers can now use voice-based service to track their shipment. An example of personalized customer experience is DHL’s partnership with Amazon. DHL customers can ask Alexa app to connect with Amazon Echo or Echo Dot smart speakers. All customers can receive status updates of their shipments by asking Alexa and real-time information as to the progress of their delivery. In the event of any issues, Echo users can directly contact DHL for assistance by its customer support team.

Optimization of Shipping Processes

optimization of shipping processes

Details regarding customer orders, fleet availability, warehousing, and personnel availability can be available via AI technology. Routes can be planned and optimized, depending on traffic conditions and other factors. For example, UPS postal service uses Orion, a GPS tool that helps drivers make timely and cost-effective deliveries. A company saves 10 million gallons of fuel annually by optimizing their routes.
AI can also analyze the data related to the supplier like audits, delivery performance, credit reports, evaluations to make future decisions.

Smart warehouses

Artificial intelligence technology changes many warehousing operations and inventory processes. The biggest trend in smart warehousing is robotics. Self-driving robots locate and move inventory in warehouses, track items and sort packages. In Amazon fulfillment centers, robots work alongside humans with artificial intelligence guiding their actions.

Lineage Logistics focuses on the automated location of inventory in the warehouse. The algorithm predicts which items will stay in the warehouse longer and which will leave soon. That increased efficiency by over 20 percent.

Demand forecasting

demand forecasting

Companies benefit from applying AI in logistics and supply chain to optimize the routes for their fleet using weather and traffic conditions data. For example, managers can decrease the number of total vehicles and direct them to the locations where the demand is expected, which leads to significantly lower operational costs. Manufacturers can better optimize the number of vehicles to local warehouses and reduce operational costs.

Self-driving technology

A lot of obvious benefits can offer driverless vehicles. They reduce human error accidents and work around the clock. The market of autonomous ships will reach $13.8 billion by 2030.

Tesla, Einride, Rolls-Royce, Daimler, and Volkswagen are working now on fully autonomous solutions. Rolls-Royce is focusing on full-electric cars and will not sell a plug-in hybrid car.

Charge ranges have been a problem in the past, but electric vehicles are quickly improving their distance capabilities. Tesla announced last year that its Truck will be able to drive as far as 800 kilometers on full batteries.

First generations of autonomous shuttles and forklifts are being deployed in clearly defined and controlled areas of the warehouse. DHL’s Parcelcopter as a drone has been successfully tested.

AI technologies can be used to build rail systems with smart infrastructure and self-driving trains. The trains will also interconnect with other trains, exchange data, and take notification-based actions.

Smart roads

Smart traffic solutions include highways with solar panels powered with LED lights. Solar panels assist in producing electricity while LED lights are used to alert drivers about the road conditions. Another application is fiber optic sensors that can sense traffic volumes and alert drivers to road conditions ahead. They can also sense when vehicles leave the road or are involved in accidents, and alert the appropriate emergency services and authorities.

Workforce management

Artificial Intelligence is being effectively used in recruiting employees, training them, monitoring day to day performance, rating their weaknesses to ensure each employee is assigned to a task they are best suited for.

Big Data

big data

With Big Data in logistics and supply chain, through RFID tags, GPS devices, bar codes, logistics companies can track their vehicles in real-time. These systems can capture real-time traffic data, on-road network data, and fleet data. They can predict possible accidents or bad weather and track shipment and fleet from anywhere.

Warehouse managers can understand how customers’ behavior changes and what expectations they often have from manufacturers and supply chain managers. Also, the warehouse managers can have a detailed insight into the process of loading, carrying, unloading, and delivering. As a result, they can plan the routes and schedule the deliveries in a better way to increase safety and decrease petrol expenses.

AR-VR technologies

AI-powered Visual Evaluation offers to arrange palletized shipments, parcels, and mail by taking photos of the cargo using special cameras and Intelligent Robotic Sorting.

To help consumers make deliberate buying decisions, visualization technologies not only allow retailers to correctly and efficiently stock their shelves but also monitor consumer shopping behaviors to identify trends.

Virtual reality helps transform abstract data into visible and interactive objects. From Wayfair to Target and Gap to Amazon, prospective buyers are able to visualize products through virtual applications, offered by these retailers.

Some retailers are also applying AR to the picking process, giving workers insight into the most efficient route to the product location through visual aids. With AR markers, placed on containers and packages, companies can monitor their merchandise, until they arrive at the destination. Smart glasses of virtual reality help in order picking and hands-free operations.

Moreover, virtual reality is used in warehouses for training workers on safety and emergency. The German logistics provider DB Schenker, has announced the use of VR for employee training in order to improve order picking and packaging processes.

Being the backbone of the economic world, logistics has a strong position on the agenda of research institutions and technology providers around the globe. Logistics and supply chain need to offer innovative omni-channel solutions that satisfy the demand for more personalized, dynamic delivery options. An optimized supply chain can help you reduce costs and remain competitive in the business landscape.