Ways to use AI for supply chain optimization

Despite all the challenges, the supply chain industry is on the cusp of a new dawn due to artificial intelligence (AI). Technology has made everything faster and more accessible. As a result, NVOCCs, logistics service providers, warehouse operators and freight forwarders can improve their operations in terms of quality, efficiency and pace of service.

Currently, only about 12% of all supply chain professionals use artificial intelligence for operational purposes. However, around 60% of professionals in this industry expect to do so in the next half decade. Gartner predicts that machine automation will become an increasingly crucial aspect of supply chain management.

Cloud computing and big data offer opportunities for many companies around the world. Logistics and supply chains fall into this category. The challenge is to identify those aspects of operations that could benefit from artificial intelligence. In fact, there is evidence that some companies are already using machines to supplement or even supplement their human resources.

Those who have embraced artificial intelligence have reported reduced costs, improved productivity, and more controllable margins or errors. In the logistics industry, even one minute saved can generate significant cumulative benefits. Hence the need to understand the operational use of artificial intelligence for competitiveness.

What is AI?

The main conceptualization of artificial intelligence is that of embedded technology that applies advanced analytics and logic-based techniques to interpret, map, support and automate operational decisions through machine learning. In other words, it is intelligence that is operationalized by machines rather than human resources.

There is a wide range of categories of artificial intelligence; therefore, its application can be complex. Currently, many verticals are incorporating artificial intelligence to great effect. According to Accenture, artificial intelligence means smart automation, augmentation and innovation. These 3 concepts are at the heart of our understanding of artificial intelligence.

Automation: Involves the use of computers and machines to perform tasks that would require manual human action.
Augmentation: This involves the use of technology and machine learning to facilitate human resources during the decision-making process.
Innovation: This involves scaling operations in circumstances where humans do not have the ability to achieve full functionality.
There are examples of using artificial intelligence to achieve these goals. For example, an online movie platform can prepare a recommended list for users based on their profile and past behavior patterns. The government and the social sector are using artificial intelligence to predict service needs and map usage patterns. The most influential artificial intelligence is often the one we don’t see, but which impacts virtually every aspect of our lives.

How AI can be used in transportation and logistics

Despite the magnificent achievements of artificial intelligence, there is always room to grow. We are only beginning to understand the true value and potential of AI. Even the proliferation of technology in business is only in the early stages. This article explores 5 ways AI can be used.

Function 1: predictive maintenance

One way to use artificial intelligence is predictive maintenance. Instead of risking injury, machines can be used to manipulate equipment. This is particularly true with equipment that is dangerous to humans. employees. Consider baler and forklift operation. Because artificial intelligence tends to be exceptionally reliable when used correctly, it can reduce the risks associated with routine failures. The need for correct use is of the utmost importance. However, AI helps mitigate operating costs and enables urgent activities. It can even replace standard equipment when it breaks down.

All of this helps you stay productive, even during periods of stress. Artificial intelligence can also be used to identify the condition of equipment to address wear and tear before it causes a breakdown. This is done by sensors that work automatically. Maintenance is carried out in optimal stages rather than following a schedule that can be written down without having an idea of ​​when and how equipment is going to break down.

Function 2: Optimization of manufacturing processes

Companies are optimizing their manufacturing processes using artificial intelligence. This involves developing performance measures that are then recorded and monitored to detect any deviations from expected patterns. It is particularly important in supply chains where responsibilities and accountability can be confused through complexity.

By using iterative product design, artificial intelligence can identify the perfect combination of value, cost, and quality on the assembly line. Then improvements can be made throughout the product life cycle. Some of the areas that can be examined include downtime, lead time, cycle length, costs, margin of error, quantities, and vendor reliability. The resulting management information is essential for continuous improvement.

One of the benefits of AI in this regard is that it can run in the background without compromising current production. Information is collected from multiple sources, validated, and then analyzed to make appropriate adjustments to the manufacturing process. This is possible because artificial intelligence can now understand and map how humans make decisions.

Function 3: Improving the Accuracy of Inventory Management

Given the imperfections of human resource entry into the inventory management system, artificial intelligence can fill the gap. In turn, this will reduce costs, waste, duplication, and redundancy. When the flow of goods in and out of factories is controlled through artificial intelligence, productivity increases in terms of order processing times. The use of artificial intelligence is particularly relevant for high-volume transactions.

Inventory management is enhanced by the application of AI at strategic processing points. For example, a comparative analysis of sales and inventory will generate red flags if there is a shortage or excess. Other companies use artificial intelligence to incorporate additional effects on demand, such as weather and market trends. Hence, AI becomes a fully integrated approach to inventory management.

Companies using artificial intelligence don’t have to suffer from overstocking or lost responses to trends. AI may recommend increasing stocks for certain products, while others are reduced based on marketing data. Some companies integrate AI into physical counts, so there is an early warning sign of when a count is necessary. Accurate real-time data is the key to success.

Function 4: security enhancement

In an era of increased scrutiny on corporate social responsibility, artificial intelligence can play a role in improving health and safety. The use of automated tools allows for early and consistent planning. Machines that are deemed too dangerous for workers can be handled automatically by AI. AI can be used to quickly report unrecognized security hazards so that a contingency plan can be activated.

The parameters to maintain the inventory are well selected and recorded by artificial intelligence. Thus, operations managers can make relevant decisions that support warehouse supervisors. The use of predictive models is particularly popular given the uncertainty that prevails in virtually all markets. Robots powered by artificial intelligence are often used to overcome known health and safety traps.

Function 5: Reduce margins of error

Another benefit of artificial intelligence is that it reduces the margin for error and therefore the organization is not under pressure to be incredibly perfect. Supplies and logistics often have many unknowns that can prevent the correct fulfillment of contracts through simple failures, such as moving products in and out of the warehouse.

Management actions taken in warehouses will support additional processes, such as manifests and trend analysis. AI is applied as a deep learning network. By doing so, the company can examine multiple storage units before comparing them with the X-ray image validation records. This is incredibly important to reduce errors with the manifest.

Preparing your business for the AI ​​era

It is much more that can be achieved through the strategic use of artificial intelligence. Companies are always looking for ways to optimize their operations, and artificial intelligence provides a strategic advantage. However, the potential for adoption is not yet certain. Perhaps executives could be swayed by some statistics that indicate a marked improvement in operations after the implementation of artificial intelligence programs.

A survey by McKinsey indicated that 61% of supply chain executives reported a decrease in costs after adopting AI. Another 53% reported higher income. The business case has been made and it is up to individual companies to continue adapting artificial intelligence to their advantage.


Artificial intelligence seeks to study the functioning of the human mind and replicate them in operations. When done successfully, AI can reduce costs, increase revenue, and improve overall productivity. This is why many supply chain professionals predict that the use of AI is sure to expand rather than contract for the foreseeable future.