How Supply Chain Enters The World of Artificial Intelligence


Supply Chain Enters the World of AI

2019-01-11 17:34:58

In this century, the world has been a witness of a breakthrough that is gradually earning space and dominance over the technological world. Of course, we are talking about Artificial Intelligence and how advances to Big data algorithms and IT systems, improve our everyday lives and optimize our professional lives as well.

But what is Artificial intelligence in the first place?

Alan Turing has defined Artificial Intelligence as a machine that can imitate human behaviour and respond accordingly. In other words, any machine that can operate human functions such as problem solving, learning, interacting with the environment, making decisions belongs to AI world.

The rapid development of computers along with the computing power being relatively cheap, enable many companies in many sectors to incorporate AI to their business models benefiting from the efficiency and processing power of these systems.

According to a report from the State of Artificial Intelligence for Enterprises, the sector of Supply Chain management is one of the top areas where businesses are gaining a lot of revenue by investing in AI systems. In particular, a McKinsey’s report found that logistics and freight forwarding companies who are early adopters of AI strategies, will profit from margins greater than 5%. However, only 21% companies from the same report have fully integrated AI to their business models and processes.
Freight forwarding industry uses a lot of data and has very complex processes making the use of AI an absolute necessity. On the other hand, AI requires large databases in order to be able to work at its full potential. Thus, we can see that a relationship between supply chain and AI is something that works in accordance and hence we cannot or we should not avoid it.

Many companies have made estimations on how much the supply chain industry will be benefited from AI. More specifically, McKinsey expects that companies will earn $1.3 to $2 billion turnover a year, while Goldman Sachs estimate that in a ten-year period, logistics companies with have a profit of $25 billion. Finally, the Centre of Global Enterprise states that if companies in the freight forwarding industry constantly integrate AI to their processes, they have a higher chance of reducing logistics costs down by 20%, supply chain processes by 50% while generating revenues of 10%.

Artificial Intelligence and Machine Learning (AI leveraging on Big data to learn, adapt and adjust its responses) have helped supply chain management through various ways, with the most important being a higher, faster and more efficient performance of nonroutine tasks compared to that of a human. The use of AI has a direct goal and that is to helping people work in a safer manner.

But let’s ease your curiosity and see what specific help AI can bring to the supply chain management.

Customer Experience
Logistics companies work with many clients, for example manufacturers, suppliers, buyers, thus, they need to properly handle many customer queries and finances. When AI is incorporated to the business model, many financial matters can be accomplished faster. You can use AI to scan and send invoices to your clients, predict payments and costs according to clients’ requirements and data history.

Moreover, many customers change or cancel orders, deliver late or provide incorrect materials. AI can forecast, adapt and respond quickly to all these situations with great efficiency. AI assistants can provide important help to customer interface, as they can take over administrative tasks, sales and create an overall unique customer experience. Predictions on customer demand can be made and sent to suppliers, so overproduction waste can be decreased or even eliminated allowing real-time decision making between you and your suppliers.

Finally, the most important advantage of AI is that it can automate many processes especially when it comes to customer service. In other words, AI systems can detect errors in documents, security breaches and report these problems to the customers saving time and money from you.  

Warehousing Services
Artificial intelligence can be used in such a way, that it will improve warehouse services by creating accuracy and safety in the warehouse. Big data enables AI to always monitor and track and consequently optimise factors that have a direct effect on the supply chain management.

The most popular AI examples that can be used to improve the warehouse are warehouse robots. Their role is to automatically pull products from the shelves, sort them and avoid obstacles that humans cannot. Other opportunities of AI are the Intelligent Robotic Sorting of letters, parcels and palletized shipments and the AI-Powered Visual Inspection which uses high quality cameras to take pictures of the cargo which allows to identify possible damage and create a solution. For instance, Amazon’s army of more than 30,000 Kiva robots in its warehouses, saved approximately $22 million in 2014.

The use of AI can give you remote control of the warehouse from a single panel and make the warehouse a safer place for your employees. Further, it can help you to better predict demand and lead times and organise the warehousing space so you can optimise the retrieving and storing of your products.