The logistics industry, from global operations to last-mile fulfilment centres and deliveries, is experiencing a technological transformation, with Artificial Intelligence (AI) leading the way. AI, in logistics, has become not just a trend but a core component of modern supply chain management, optimising operations from warehousing to delivery. AI's role in logistics revolves around enhancing efficiency and accuracy across the supply chain. By leveraging AI technologies, companies can streamline operations, reduce costs, and improve service delivery. This has been the case with top companies around the globe, Walmart, Siemens and Unilever that have sought AI tools to deepen their relationship with existing and established suppliers, engage with new suppliers during unexpected disruptions, and automate negotiations with ‘tail-end suppliers’ and others. Here are some key applications of AI in logistics:
- Predictive Analytics: Predictive analytics utilizes data, manually or using machine-learning algorithms, to predict future trends and events. It leverages historical data to project potential outcomes, aiding in the formulation of strategic decisions. AI-driven predictive analytics are crucial for demand forecasting and inventory management. By analysing historical data and identifying patterns, AI systems can predict future trends and consumer behavior.
- Route Optimization, or what professionals in the field refer to the lifeblood of modern logistics, AI enhances delivery logistics through advanced route optimization. AI algorithms analyze numerous variables: traffic patterns, weather conditions, and vehicle conditions to determine the fastest and most fuel-efficient routes while decreasing their environmental footprint.
- Autonomous Vehicles and Drones hold promising opportunities once integration challenges as regulatory hurdles, public perception, and interoperability between different autonomous systems are overcome.??Autonomous vehicles, including drones and self-driving trucks, are becoming increasingly important in the logistics sector. These technologies promise to revolutionize last-mile deliveries and warehouse operations by automating tasks that are typically labor-based and costly. Based on a 2018 Mckinsey report ‘Technology delivered: Implications for cost, customers, and competition in the last-mile ecosystem’, automated vehicles or semiautomated vehicles will exponentially reduce the delivery costs in cities up to 40 percent. The per-parcel cost of the last-mile delivery will be dramatically reduced thanks to the autonomous vehicles’ technologies.?
- Real-Time Tracking and Visibility: ‘Your order is out for delivery’ brings joy to every customer; however, end-users have become increasingly restful in tracking their parcels. AI promotes enhanced tracking of shipments and assets in real-time, providing businesses and customers with up-to-date information on the whereabouts of their goods.
- Intelligent Robotics in Warehousing: In the warehouse, AI-powered robots are increasingly used for picking and packing orders, managing inventory, and handling materials.
- The integration of AI into logistics brings numerous benefits, significantly impacting operational efficiency and customer satisfaction such as cost reduction as it helps reduce costs by optimizing resource allocation and reducing waste. It also speeds up processes like delivery and customer service with real-time updates and faster delivery times meet the growing customer expectations for quick, reliable service while also minimizing human error in inventory management and other human-based tasks. AI solutions also adapt to varying scales of operation, allowing businesses to manage growth effectively without a proportional increase in operational costs or complexity. AI leverages different variables to ensure cost reduction, time-efficiency, environmental sustainability, and enhanced decision-making. Dave Waters, Associate Professor of Metamorphic Petrology at the University of Oxford, declared “predicting the future isn’t magic, it’s artificial intelligence.” AI is not only predicting the future it is shaping the present. AI in logistics is not merely a futuristic concept but a present-day reality that is reshaping the industry. As AI technology continues to evolve, its integration into logistics will deepen, further enhancing efficiency, reducing costs, and improving service delivery.?
?Hoek, R. (2023, November 21). How Global Companies Use AI to Prevent Supply Chain Disruptions. Harvard Business Review. https://hbr.org/2023/11/how-global-companies-use-ai-to-prevent-supply-chain-disruptions
Heid, B., K?sser, M., Klink, C., Neuhaus, F., Schr?der, J., & Tatomir, S. (2018, August 27). Technology delivered: Implications for cost, customers, and competition in the last-mile ecosystem. McKinsey & Company. https://www.mckinsey.com/industries/travel-logistics-and-infrastructure/our-insights/technology-delivered-implications-for-cost-customers-and-competition-in-the-last-mile-ecosystem
Here, A. (2024, February 19). Artificial Intelligence Supply Chain Quotes. Supply Chain Today - Homepage. https://www.supplychaintoday.com/artificial-intelligence-supply-chain/
Real-time visibility in the supply chain. Why is it important? (2023, December 11). FarEye. https://fareye.com/resources/blogs/real-time-visibility
