Artificial intelligence (AI) is one of the most game-changing technologies in history. It benefits businesses all around the world by improving productivity and reducing costs.
AI has also made its way into logistics and supply chains, providing several benefits to firms ready to embrace new technology. Artificial intelligence in logistics is a growing concept that has the ability to change the way companies work. Artificial intelligence in supply chains is extensive, with several applications utilized by enterprises all over the world.
Artificial intelligence provides advantages such as greater efficiency of management operations such as order fulfillment, improved inventory accuracy, shorter delivery times, and more accurate forecasting models. And that is the reason why AI-driven solutions are in great demand by the Logistics industry.
Let’s look at some recent figures to understand the scenario more clearly.
Artificial Intelligence in Logistics Industry – Latest Statistical Figures
Source- Emergen Research
- The Artificial Intelligence market is predicted to reach USD 196.6 billion in 2023, up from USD 136.6 billion in 2022, globally.
- In 2020, the Global Drone Logistics and Transportation industry was worth USD 7.53 billion. It is predicted to reach USD 31.84 billion in 2028, according to Emergen Research.
- According to an Accenture report, 36% of businesses have effectively used Artificial Intelligence (AI) in their logistics and supply chain systems.
- Based on the research, it is found that AI-driven data management plays an essential role in enhancing the supply chain’s performance.
- According to an MHI study, Artificial Intelligence will increase at a faster pace over the next five years, growing from 14% to 73%.
With evolving customer demands, process digital transformation has become essential for seamless logistic operations. Let’s consider some of the ways it is already assisting the logistics companies.
The Advantages of Integrating AI in the Logistics Industry
Artificial Intelligence can provide various advantages to the logistics and shipping industry. Some of them are:
1) Improved Process Automation
AI can help in the automation of processes and the reduction of the amount of manual intervention required in logistics and supply chain operations. This can assist in improving operational accuracy and efficiency, resulting in higher production and decreased costs.
AI can also be used to handle and interpret vast volumes of data more quickly, allowing for process improvement and better decision-making.
2) Predictive Analysis
Anticipating demand based on past data might help keep inventories in check and improve operations, potentially changing the logistics business. This data analysis can be performed by AI at many levels and intervals.
Furthermore, analyzing massive amounts of data using machine learning and other approaches assures that mistakes are fewer than 1% and that human labor may be employed more effectively. Optimizing supply chains using AI and analytics can also help in risk mitigation and forecasting for increased profitability.
With predictive analysis in place, shipments can be strategically planned via optimum routes, making the entire process smoother and simpler. By making informed decisions, other means of transportation may also be examined and optimized for better end outcomes.
3) Enhanced Safety
AI-powered automated technologies can assist with smarter planning and more effective warehouse management, which can improve worker and material safety. AI can evaluate workplace safety data and alert producers to any potential hazards.
It is capable of recording stocking parameters and updating operations, as well as providing appropriate feedback loops and preventative maintenance. This enables businesses to respond quickly and aggressively in order to maintain warehouses secure and comply with safety regulations.
4) Reduced Operation costs
Here’s one obvious advantage of Artificial Intelligence (AI) systems for logistics and supply chain management. From customer service to the management of warehouses, automated intelligent processes can run error-free for extended periods of time, reducing the number of manual supervision-led errors and worksite catastrophes.
Furthermore, warehouse robots can deliver increased speed and precision, resulting in higher levels of production, all of which will result in lower operational expenses.
5) On-Time Deliveries
As previously noted, AI solution development technologies assist in lessening reliance on manual labor, making the entire process faster, safer, and smarter. This facilitates prompt delivery to the customer in accordance with the agreement. That is how companies like Amazon can deliver orders to their prime members in just 24 hours.
Traditional warehouse operations are accelerated by automated technologies, which remove operational impediments in the value chain with minimal effort to meet delivery goals.
Use-Cases of Artificial Intelligence in the Logistics Industry
AI has the capacity to completely guide and alter a product’s supply chain. This would assist to speed up work in a company while also ensuring that the product in demand is made and supplied effectively. Let’s look at some AI use cases in logistics to see where it may be applied.
1) Logistics Planning
Even the best army will get defeated if it goes into combat without a battle plan; Similarly, no e-commerce retailer would be able to survive if he goes into the business without logistical planning.
Logistics planning is a sort of logistics management in which a concerned person plans how to deliver the appropriate items to the right customer at the appropriate moment and for a minimal cost. The purpose of logistics planning is to create a lean and cost-effective logistics organization capable of meeting service standards at all times and surviving supply chain interruptions.
Without logistical planning, company owners face costly shocks, inefficiencies, and the inability to efficiently expand their business – especially when times are tough.
How Artificial Intelligence can help? – AI systems can help with planning because they are strong at scenario evaluation and quantitative analytics, both of which have significance in planning.
Thus, AI along with machine learning and deep learning can help with:
- Forecasting Demand
Organizations may leverage real-time data in their forecasting attempts thanks to AI capabilities. As a result, when compared to traditional forecasting methods such as ARIMA (AutoRegressive Integrated Moving Average), AI-powered forecasting of demand approaches considerably lower error rates.
- Supply Planning
Artificial intelligence can aid enterprises with real-time demand analysis, allowing them to dynamically adjust their supply management factors to enhance supply chain efficiency. Businesses consume fewer resources while using dynamic supply planning because dynamic planning reduces the amount of waste.
2) Automated Warehouses
With AI, logistics businesses can make their warehouses more efficient, reduce the chances of theft, and save money and other resources. For warehouse automation, businesses require:
- Warehouse Robots
Few of the logistics giants, like Amazon, are already using AI-driven warehouse robots to perform their day-to-day tasks. As of today, AI robots are assisting employees in picking, sorting, delivering, and storing items in 26 of Amazon’s 175 fulfillment facilities.
AI can be used to automate mundane logistical jobs like data input, labeling, and packaging. AI robots can decrease errors and enhance accuracy by automating certain procedures, saving time and money.
- Damage Detection Systems/ Quality Control
Damaged items can lead to unsatisfied consumers and falling sales numbers. Thus, businesses can utilize AI-powered Damage Detections Systems such as computer vision technology to detect defects which are may be undetected by humans, and provide quality control in warehouse operations.
Later, logistics managers can assess the extent and kind of damage and take steps to prevent additional damage to the goods.
- Predictive Maintenance
Logistics companies can face heavy losses, sometimes in millions, if their machines breakdowns even for a few minutes. Machinery breakdown can be the worst nightmare for any logistics company owner. To tackle these types of scenarios, Predictive Maintenance can play a crucial role.
Predictive maintenance is the process of forecasting possible production breakdowns by evaluating real-time data acquired from IoT sensors in equipment.
Analytics solutions driven by AI and machine learning improve predictive analytics and find patterns in sensor data, allowing technicians to take action before a malfunction occurs.
Good Reads: AI in Banking: How AI is Disrupting the Banking Industry
3) Smart Deliveries
AI-powered self-driving vehicles and drones can be employed to improve consumer last-mile delivery services while saving money, labor, and other resources.
- Autonomous Vehicles
Autonomous vehicles eliminate the need for manual work and improve the efficiency and cost-effectiveness of the logistics and supply chain. This is why several business titans such as Tesla, Google, and Mercedes-Benz are significantly investing in the notion of autonomous automobiles. It is only a matter of time before we see autonomous trucks on all the roads of the world.
- Delivery Drones
On the other hand, AI-powered delivery drones are valuable equipment when businesses like FedEx need to deliver items to locations where ground transportation is not safe, dependable, or sustainable.
Delivery drones can help companies decrease waste costs and avoid expenditures in costly storage facilities, particularly in the healthcare industry, where pharmaceutical supplies have a limited shelf life.
- Real-time Shipment Tracking
Artificial intelligence can be employed for building real-time tracking and visibility systems that provide clients with up-to-date information about their orders. AI-powered trackers may be utilized for tracking incoming shipments, detecting potential delays, and updating consumers about the status of their purchases automatically.
Also Check: AI in Supply Chain Management: Navigating the Future of Logistics
4) Data Analytics with AI
Many logistics companies find it difficult not just to gather massive volumes of data, but also to make sense of it and use it in the appropriate context. As a result, they are not making the most of their expanding information resources.
But the good news is that this can be overcome by implementing AI solutions in the existing systems. AI is revolutionizing analytics by providing levels of speed, size, and granularity that are not humanly achievable. AI employs complex algorithms that businesses may utilize to examine previous consumers, competitors, staff members, and other behavior to make optimum conclusions about what could happen in the future or what has to be done to effectively handle issues and opportunities.
AI-driven Analytics can be used by Logistics enterprises for:
- Supplier Risk Management
AI can collect supplier data to generate a thorough risk profile. Using AI-driven analytics, it is feasible to identify potential problems with suppliers sooner and assist in decreasing the risk of supply chain outages before it gets too late.
- Route Optimization
Artificial intelligence (AI) models can work with firms in analyzing current routing and tracking route optimization. According to the companies that provide mobile app development services, Shortest-Path Algorithms are used to determine the most effective route for logistics trucks. As a result, the company will be able to minimize transportation expenses while also speeding up the shipment process.
5) AI for Administration Works
In the logistics industry, there are numerous logistics-related forms like a bill of lading from which structured data needs to be extracted correctly. And, most businesses do this manually. Thus, it is very time-consuming and there is always a chance of errors which can cost a lot to the company.
Artificial Intelligence can ease up the burden of administration by:
- Automated Document Processing
Documents such as invoices, bills of lading, and rate sheets facilitate communication among customers, suppliers, and logistics service providers. AI-powered document automation systems can improve the efficiency of employees by automating data entry, error reconciliation, and processing documents.
- Automating Manual Office Tasks
With AI technologies, Logistics companies can automate various back-office tasks, such as scheduling transportation, organizing cargo pipelines, assigning and managing staff to certain stations, and tracking goods in the warehouse.
Furthermore, AI solutions are able to auto-generate reports, evaluate their contents, and email them to interested parties based on the information reports contain.
- Chatbots
Customer service plays an essential role in logistics organizations since customers will contact them if they have issues related to order delivery. AI-powered customer service chatbots are capable of performing low-to-medium contact center duties like:
- Making a delivery request
- Modifying an order
- Package tracking
- Solving Frequently Asked Queries
- Fraud Detection and Prevention
In the logistics and supply chain industries, artificial intelligence may be utilized to identify and prevent fraud. This is accomplished by analyzing client data and detecting any anomalies or suspicious conduct, therefore assisting businesses in reducing the risk of fraud and protecting their consumers.
Also Explore: AI in Healthcare: Drives Potential Enhancements across the Healthcare Sector
Future Of Artificial Intelligence in the Logistics Industry
The logistics industry has seen a significant transition as a result of artificial intelligence. According to the most recent Accenture research, the future of AI in logistics is nothing short of exciting, with experts projecting that by 2035, it may enhance logistics productivity by a staggering 40%.
The influence of AI is estimated to create between $1.3-2 trillion in economic value over the next two decades.
According to Gep, a supply chain, and procurement consulting firm, AI-powered inventory and warehouse management solutions are poised to play a crucial role in cutting expenditures, saving time, and enhancing efficiency in the logistics industry.
The future of AI in logistics has limitless potential. With major technology advancements, logistics companies will be able to employ AI to enhance their operations, establish new income streams, and deliver better customer experiences.
Logistics organizations can unlock all of their capabilities and generate success in an extremely competitive marketplace by integrating AI.
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