Analyst Insight: The use of artificial intelligence (AI) in logistics and supply chains has increased significantly over the past several years as companies have been seeking ways to enhance decision making, streamline operations, reduce costs and improve customer satisfaction. By providing logistics and supply chain professionals with deeper insights at a much higher frequency and granularity than ever, AI has become a crucial tool that nobody can ignore. Without question, AI has made its mark — and it’s here to stay.
Supply chains have become exponentially more challenging to manage since the beginning of the decade. Market volatility, exacerbated by — but not limited to — the COVID-19 pandemic, has elevated the need for supply chain agility and flexibility. As a result, logistics and supply chain organizations across numerous industries have turned to the power of AI and the revolutionary solutions the technology delivers, including:
Real-time visibility. With today’s complex network of supply chains, it’s important for manufacturers to get complete, real-time supply chain visibility. AI-powered systems provide this level of visibility by integrating data from various sources, such as suppliers, manufacturers, logistics providers and retailers. This helps businesses track inventory levels, monitor shipments, identify bottlenecks and respond quickly to disruptions or changes in demand —which enhances overall supply chain agility.
Enhanced demand forecasting. By enhancing predictability and resource planning, demand forecasting helps supply chain and logistics organizations maintain the delicate balance between consumer demand and supply. AI technology excels at forecasting demand by extracting insights from extensive repositories of data. This can include numerous sources such as past sales records, customer transactions, social media mentions and prevailing economic indicators. Additionally, AI projection tools can help facilitate better collaboration between supply chain partners by allowing demand forecast data to be shared with suppliers. This helps businesses optimize production schedules and delivery plans to create a harmonized supply chain system. The higher level of predictability also allows businesses to minimize stockouts, optimize inventory levels and reduce excess inventory.
Warehouse optimization. AI algorithms can analyze historical data, order patterns and product characteristics to determine the most efficient placement of products. AI can also simplify complex procedures, optimize picking routes, speed up work and enhance the overall warehouse layout. This goes a long way in facilitating the timely retrieval of an item from a warehouse and ensures a smooth journey to the customer.
Autonomous mobile robots (AMRs). Utilized to automate a range of tasks, such as picking, packing and replenishing, AMRs are becoming an increasingly popular tool in supply chain warehouses around the world. By incorporating AI and innovative technologies — including machine learning, computer vision and sensor fusion — these robots are able to execute intricate tasks with exceptional precision. AMRs can also work collaboratively alongside human workers. This allows humans to focus on more complex tasks that require human creativity and problem-solving skills, while the robots handle repetitive and mundane tasks. Dynamic partnerships on this level have the potential to maximize workforce productivity and improve the overall efficiency of warehouse operations.
Outlook: It’s important to note that some of the advantages that AI provides require an advanced technological infrastructure that many companies might not have at this point in time. Yet, as this vital technology continues to advance at an exponential rate, businesses that embrace AI in their supply chain operations will be well-positioned for long-term success in the complex and ever-evolving global marketplace.
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