Role of Artificial Intelligence (AI) in Supply Chain Management

Introduction

Artificial Intelligence (AI) is already powerful and continues to grow. Everything from social media to self-driven cars is now being defined by how fast machines can be trained to mimic human behaviour or even exceed human beings in their capabilities.
Enterprise applications based on advanced technologies such as Machine Learning (ML) and AI, though in the budding changes of development, are beginning to drive unique and innovative strategies of business. In the logistics and supply chain industry, these technologies are proving to be a game changer. According to Gartner, supply chain organizations expect the utility of machine automation in their supply chain processes to double in the next five years. Also, the Annual Industrial IoT (IIOT) spending by growing organizations is estimated to reach $500 billion by 2020.

Why AI in Supply Chain Management?

The main reason why AI is being implemented in the supply chain and logistics industry is because organizations have realized that AI has the potential to solve the problems of running a global logistics network. On being implemented in the right manner, AI enables organizations to be smarter, take more agile decisions, and anticipate problems.
Proactive systems enabled by AI are surpassing customer expectations for on-time and intact deliveries and improving the quality of service. They are also improving competence through automated compliance processing. The result is lesser problems and lower costs across the logistics network.
What is most exciting about AI, is its unlimited potential. When combined with technologies such as the Internet of Things (IoT), ML, and predictive analytics, algorithms turn more powerful. With access to additional data, organizations now have a better picture of their global logistics networks. This transparency is essential as it improves the thought process about supply chain management and logistics is changing.

Areas where AI will Have an Impact

AI promises to have a dramatic impact in the following areas:

• Predictive capabilities aid in demand forecasting. When inventory lags demand, organizations have to undergo losses. AI is improving its efficiency in predictive demand and network planning which in turn allows merchandisers to become more proactive. Once they know what to expect, they can modify the number of vehicles and push them to locations where more demand is expected. This leads to decreased operational costs.
• Chatbots have changed the whole concept of customer support. According to Accenture, 80 percent of all customer interactions can be managed by bots. AI can customize the relationship between logistics providers and customers.
An example of customized customer experience is Amazon’s partnership with DHL. On activating DHL Parcel “skill” through the Alexa app, DHL customers can request Alexa to connect with Echo Dot or Amazon Echo smart speakers and check their parcels’ status. In case of any issues that arise during the interaction, Echo users can contact DHL directly for assistance.
• Smart warehouses are more competent. A smart warehouse is a completely automated facility where most of the work is done through software or automation. In the process, tedious tasks are made easy, and operations turn cost-effective.
• Amazon and Alibaba have already converted their warehouses by utilizing automation. Amazon recently manufactured and released machines that automate the job of boxing customer orders. In Amazon warehouses, robots work alongside humans to increase efficiency and productivity.

Conclusion

In the near future, Artificial Intelligence is all set to define a new standard of efficiency across logistics and supply chain processes. The game is changing at a fast pace, and creating a “new normal” in how global logistics companies handle data, serve customers and run operations, in a manner that is intelligent, automated, and more efficient.