Artificial Intelligence in Logistics - Maximizing Operational Efficiency

With growing complexity and interconnectivity in the supply chain industry, technology like artificial intelligence and machine learning has become central to logistics management. Firms across the globe are increasingly implementing AI to streamline and optimize handling of logistics and inventory management.

Computers can handle huge sets of data at a time, which would otherwise be impossible to humanely take into a single decision-making process. This is why Artificial Intelligence is a boon to Supply Chain Management.

Using numerous data sets and applying intelligent algorithms, a machine can analyse endless possibilities that lead to effective strategizing. AI minimizes the risks of human error.

In short, with the help of AI, operational efficiency can be maximized and costs can be minimized. As per executives and experts within the field, the prediction is clear – AI is here to stay and will further transform these fields over the upcoming years.

Elucidated below are 8 ways AI is revolutionizing the supply chain and logistics management-

1. INVENTORY MANAGEMENT

No business can run properly without a correctly maintained inventory. Both overstocking and understocking can be a detriment. With the right inventory management system, a business can simply concentrate on selling their product instead of managing its storage.

A crucial need for AI in inventory management, other than its ability to ensure the maintenance of stock, is its ability to predict demand. Algorithms are now capable of studying customer demands across vast chunks of data and understand which items will soon be in demand and which might fail to generate enough buzz. This is known as ‘demand forecasting’ and is widely used across businesses and online platforms around the world. Thus instead of relying on real-time demand, a business can be prepared beforehand and take stock accordingly. This has proven to be the most revolutionising aspect of AI in logistics.

2.MAINTAINING THE WAREHOUSE

With the rise in facial recognition in AI, machines are now capable of handling security. An unmanned warehouse can easily be kept safe by tracking all those who enter and leave it. Furthermore, machines can keep track of items being put on shelves and those leaving the warehouse by simply reading the barcode on the package and updating inventory accordingly.

Unmanned warehouses have taken the fancy of the bigwigs of the online selling game. So far, they have proven to be effective in emulating the methods of manned warehouses while being far more efficient by eliminating human error.

3.OPTIMISING SHIPPING PROCESS

The effectiveness of AI doesn’t simply diminish when the item leaves inventory. It is also used to predict the best possible shipping route. Machines use graph theory to predict the shipping routes that can balance between the fastest and most cost-effective for the company. This is especially handy for companies that service multiple customers as shipping routes are then predicted to minimise cost while maximising reach for as many customers as possible.

AI is also able to predict traffic conditions and peak hour situations. These are factors that affect a company’s shipping time. By avoiding peak hour traffic and scheduling delivery during the lightest traffic hours, one can ensure that their delivery executives spend less time waiting on roads and more time delivering to even more people. Thus, effectiveness, and in turn, profits are maximised.

4.SUPPLIER RELATIONSHIP MANAGEMENT

Shipping and logistic management isn’t the only phase of the supply chain process that AI helps maintain. One of the most important aspects of any business is its supplier. Identifying the right suppliers and maintaining a list of each item, corresponding to those suppliers is important. When refilling inventory or recalibrating item needs according to demand, the relationship with one’s suppliers is the deciding factor of how smoothly the transaction will run.

AI can monitor supplier parameters such as cost, credit score, quantifiable past experiences such as delivery speed, and create a list of the best possible options for any given situation. This ensures that a business runs smoothly and the relationship between it and its suppliers remains effective, unbiased and cordial.

5.WORKFORCE MANAGEMENT

Needless to say, with an effective AI managing your supply chain, dependence on an administrative staff becomes minimum. However, this isn’t the only use case for AI in workforce management. Today, Artificial Intelligence is being effectively used in recruiting employees, training them on the job, monitoring day to day performance, rating their performance as well as segregating their strengths and weaknesses to ensure each employee is assigned to a task they are best suited for.

AI can help an organisation plan its hiring and training process more effectively. This allows for smooth day to day transactions on the floors of the organisation. It also makes the work assignments better suited, leading to happy employees.

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