Artificial intelligence (AI) has been around for nearly 70 years but is now finding its footing in the supply chain.

According to McKinsey, about 50 percent of organizations responded that at least one business unit has adopted AI. The number has leveled off recently but has doubled since 2017.

More companies are integrating AI into their daily activities to cut labor costs and simplify operations. Even better, as technology enters the supply chain, it can reduce mistakes and speed up processes. Its high-level data processing makes it a valuable tool for automating repetitive tasks, tracking inventory, and improving logistics.

As we’ve learned in recent years, the supply chain relies on hundreds of factors usually outside our control. AI gives manufacturers and distributors more authority over the process.

The result is a more predictable, reliable, and simple supply chain.

More Efficient Trucking and Shipping

There has been a shortage of truck drivers in the United States for years, and it’s shown few signs of improvement.

The American Trucking Association suggested in October 2022 that the industry needed about 78,000 more truck drivers. Though the number dipped slightly from more than 81,000 in 2021, it’s still a big issue for the supply chain.

Although AI systems can’t drive trucks, they can help fleets find more efficient routes. Better route planning saves drivers time and money, meaning products can get from A to B in less time and at a lower cost. Drivers can reduce total miles and hours spent on the road, resulting in lower fuel costs and less wear and tear on their rigs.

AI technologies also help maintain product integrity and quality, especially when refrigerated or fragile items must be delivered within strict timeframes. Machines can plan routes that limit dead miles, track, support, and update ETAs, and coordinate supply movement from one location to another.

Addressing Ongoing Labor Issues

We’ve heard stories about how robots may someday take our jobs, but what if they only did tasks we don’t want to do?

Robotics and AI are perfect for automated manufacturing tasks and can even drive forklifts without human control. This isn’t to say people are left out of the equation. Instead of performing repetitive tasks, workers are freed up to focus on more intensive and valuable activities.

Relying on AI and robotics to solve our labor issues also makes sense from an economic point of view. The upfront costs of robotics and AI might seem high, but machines only need routine maintenance and repairs once installed. Meanwhile, workers perform repairs and help the AI figure out what actions it needs to complete and how.

Think about it this way – you could buy a vacuum cleaner to suck up dust bunnies around your house for a couple hundred dollars or buy a self-cleaning robot vacuum for a few hundred more. It’s a small example, but it’s a great way of showing automation and robotics at work.

Predicting Future Demand Cycles

When we think about the supply chain, it’s partially about supply and demand. A well-working supply chain anticipates needs and ensures products are available to meet them.

AI and machine learning use external inputs to track inventory in real time. Workers program the system to identify products based on camera inputs and image recognition, RFID stickers, or another tracking mechanism, then the machine is let loose to do its job.

While a human worker may perform demand forecasting using historical data, feeding the same data to a machine is faster and more effective. AI can understand and analyze vast amounts of data from multiple sources at lightning speed to find patterns and gaps that could otherwise go unseen. It can determine needs based on seasonality, weather, location, and more to create detailed forecasts for every situation.

Improves Warehouse Management

Humans are imperfect creatures. Sometimes they make mistakes.

AI provides incredible support for workers because if the data fed into it is correct, it’s fully capable of maintaining proper inventory levels and tracking products across the supply chain. As a result, the system acts as a second pair of eyes to streamline management systems and reduce mistakes.

One of the most successful uses of AI and machine learning in the supply chain is Walmart and its move to RFID stickers. The multi-billion-dollar company tried an RFID solution in the 2000s but shelved the project. In the early months of the pandemic in 2020, the company resurrected the system on a smaller scale and saw fewer mistakes, faster fulfillment, and happier customers due to more accurate online availability data.

RFID uses radio waves sent by readers to tags containing small electronic chips. When the signals are returned to the reader, the system automatically updates its information to account for any changes. People aren’t needed to physically take inventory – it’s handled entirely by the inventory system and AI.

Improves Partnerships… and Weeds Out Bad Ones

Unlike your average person, AI can separate feelings from facts. That makes it a great judge when choosing a business partner or product vendor.

Electrical distributors can use AI platforms to keep track of all types of data, including instances where quality issues were found, late orders were received, or other problems came up. The AI uses a combination of computer vision, input data, and other information sources to figure out if manufacturing partners are always running late with shipments, are out of stock, or have ongoing quality finished product issues.

It creates a 360-degree view that helps simplify decisions, boosting the bottom line and increasing customer satisfaction.

Enhanced Customer Support

When was the last time you needed product support or had a question but couldn’t get ahold of customer service?

It happens to the best of us, but the result is always a mix of frustration and helplessness. Thankfully, AI can fill in the gaps by providing 24/7 support when you need it most.

One of the most visible forms of AI support is the chatbot. Chatbots walk customers through specific questions to help them find information. AI can also help check order statuses, understand customer behavior, and supercharge response times.

The result is an improved customer experience supported by accurate and fast answers.

Is AI Our Supply Chain Hero?

Sure, it would be great to say that artificial intelligence is the be-all-end-all for the supply chain, but that isn’t true… yet.

AI is a fantastic solution to address problems in a company’s supply chain but can’t do anything about companies and procedures it doesn’t control. Companies like Amazon have strong supply chains supported by powerful AI, but that’s because it owns nearly every aspect of its supply chain.

For most companies, AI supports internal operations and improves external interactions like customer service and manufacturer partnerships. Still, there is a heavy reliance on others to get it right, too. Unfortunately, just because you can control your piece of the supply chain, it doesn’t mean everyone else is capable or ready to do the same.

We’re getting closer to becoming a completely technological society, but we’re not quite there yet. As more companies adopt artificial intelligence, the supply chain will improve, helping us get the products or services we need more efficiently.

It might feel like something out of a science fiction novel, but AI is critical to helping us solve increasingly complex problems. As we learn to harness its abilities, it’ll become easier to understand its nuances and unlock our full potential.

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