The globalization of supply chains has allowed trade to flourish, but added layers of complexity and cost. Companies are racing to find ways to operate more efficiently and affordably without undermining the integrity of the supply chain — and those who figure it out first will lead the industry. Artificial intelligence presents a huge opportunity to win that supply chain race for perfection, helping businesses save time and money with advanced machine learning.
What is AI?
In simple terms, artificial intelligence (AI) refers to activities performed by machines that mimic human work and behavior. Big data “powers” the artificial neural networks of these deep-learning machines, which can then perform a variety of tasks like reasoning, problem solving, learning, planning, and more.
At Gartner’s Supply Chain Executive Conference, Gartner analyst Noha Tohamy grouped AI into two categories:
What’s important to remember is that any type of AI must be informed by a massive amount of up-to-date, accurate data to effectively improve supply chain operations.
The Need For AI in the Transportation Industry
McKinsey Global Institute’s report “Notes from the AI Frontier: Insights from Hundreds of Use Cases” states that AI, compared to other analytics techniques, can improve performance in the transportation and logistics industry by 89 percent. The McKinsey report also asserted that AI will create up to $500B in value for transport and logistics alone, which accounts for over 6 percent of industry revenues.
Additionally, MH&L found that the average U.S. business loses over $170K annually due to outdated payment processes (using manual systems, fixing errors, responding to suppliers, etc.) within the supply chain. A significant portion of these payment challenges could be improved, or eliminated, with AI and would save logistics businesses thousands.
Though there is a clear need in the transportation industry for AI technology, it’s equally as clear why most companies are not using it — deploying AI is complex and expensive. The volume of data needed to fuel AI systems requires companies to heavily invest in updating IT infrastructure, hire data scientists, and plan for wide-scale operational integration. Yet most experts agree that it’s only a matter of time — the global supply chain will continue to evolve, with more and more elements being run by intelligent machines.
Revolutionizing the Supply Chain With AI
As AI slowly eases its way into transportation and logistics companies, the wildest possibilities seem achievable with advanced machine intelligence. Here are a few examples of how AI can revolutionize supply chain operations:
Ready or not, the logistics and transportation industry is careening toward supply chains powered by machine learning. AI can be a huge benefit to supply chain managers, but only if it is informed by solid data and smoothly integrated into existing operations.