Supply chain management has become an increasingly difficult task for many companies in recent years. Not only the global pandemic but also the geopolitical situation contributed to the weakening of the SCM. Therefore, companies are investing in intelligent solutions to streamline their supply chain operations. One of these technologies is Artificial Intelligence. Let’s take a look at how artificial intelligence can be used to start solving these supply chain problems.
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Artificial Intelligence in supply chain
Artificial intelligence is a powerful technology that affects the functioning of any sector. It makes organizations smarter and more resilient. No wonder AI is widely used in areas such as logistics, transport, and shipping. Many companies are investing in AI to optimize their supply chain management. According to Gartner, by 2026, over 75% of commercial applications for supply chain management will offer AI, AA, and data science.[1] This just shows how important a role AI plays in the supply chain.
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Why introduce AI in the supply chain?
The introduction of AI in the supply chain ensures:
- Better performance
- High-quality products
- Lower costs
- Speedy deliveries
- Improved customer services
Of course, these aren’t all the benefits of the AI-powered supply chain. With so many advantages, both AI and ML provide tremendous value for supply chain operations. According to research conducted by McKinsey, as a result of introducing artificial intelligence into supply chains, 61% of directors declare a decrease in costs and a 53% increase in revenues.[2]
How can AI be used in the supply chain?
AUTOMATION
Artificial intelligence is one of the modern technologies that are used to automate the supply chain. Of course, we can also mention machine learning, robotic process automation, or digital twins. Companies use these technologies to improve the production, storage, and distribution of goods. What tasks can be automated thanks to artificial intelligence?
Transportation
Autonomous trucks? In the past, no one imagined it; today, many companies are investing in technology and transport automation. Take, for example, Amazon or Nuro. According to research, the autonomous vehicle market will grow from USD 1.6 billion in 2021 to USD 11 billion by 2028.[3]
Warehouses
Cobots are a great example here. These are other collaborative robots that are a proven solution for the robotization of almost any process. They help to increase productivity as well as security in warehouse management.
Back-office tasks
With AI, companies can automate document processing (delivery orders, dock receipts, etc.). Manually completing these tasks is very time-consuming.
FORECASTING
It’s clear that you can’t predict the future, but artificial intelligence can make forecasting more accurate. By detecting patterns and trends across your supply chain, AI can identify known and future risk factors. Hence, the supply chain uses AI to anticipate and prepare for future scenarios. And also to locate areas with lower productivity for improvement. Here are the advantages of a high level of prediction accuracy:
- Details about specific regions’ inventory requirements
- Optimization of inventory levels
- A reduction in demand and supply fluctuations across the supply chain
- Reduced storage costs
ON-TIME DELIVERY
People like to place orders with companies that can deliver products as quickly as possible. This means that faster shipping is important if companies are looking to attract customers. AI systems and the automation of many tasks minimize manual efforts, making the delivery process faster. As a result, customers receive products on time, and businesses receive positive feedback.
INVENTORY MANAGEMENT
Maintaining optimal inventory levels is one of the biggest challenges for supply chain companies. Lack of inventory may result in lower sales excess and higher storage costs. AI algorithms provide valuable data and analysis to provide a complete overview of your warehouse and supply chain. Thus, with AI and accurate forecasts of future demand, your warehouse can handle your resources efficiently.
QUALITY INSPECTION
AI is a remarkable tool that helps improve overall quality control in the supply chain. Classic solutions aren’t so much expensive as they are exposed to human error. In contrast, AI-based intelligent solutions are faster and more accurate. The core technologies that use AI for quality control are:
- Digital twins
It is a virtual representation of a product, a single part, or even a process.
- IoT sensors
A system for controlling a given production stage. Through an internet connection, it can provide data from machines to operators in real time.
- Computer Vision
A CV algorithm can interpret the images provided by the cameras and immediately determine the product’s quality.
Conclusion
In today’s world, using AI to better manage your supply chain is a must. As we can see from the above article, the use of this technology improves many tasks and operations. Automation, forecasting, on-time delivery, inventory management, and quality control are areas where AI has a powerful influence. And logistics companies derive huge benefits from the use of AI in the supply chain.
[1] https://www.gartner.com/smarterwithgartner/gartner-predicts-the-future-of-supply-chain-technology
[2] https://www.mckinsey.com/featured-insights/artificial-intelligence/global-ai-survey-ai-proves-its-worth-but-few-scale-impact
[3] https://www.fortunebusinessinsights.com/industry-reports/autonomous-cars-market-100141