Exploring the Connection Between AI & Logistics

As artificial intelligence continues to make its way into every corner of the business world, shippers should consider taking a step back to look at how this advanced technology really fits into their transportation, logistics, and supply chain strategies.

Advanced technologies like artificial intelligence (AI), machine learning (ML), and the Internet of Things (IoT) are getting a lot of buzz right now for the way they generate and use data to enhance decision-making and manage repeatable tasks, thus freeing up labor to focus on more important things.

Able to analyze enormous volumes of data, AI is gaining early traction in the logistics space, where it “enables the tracking and measurement of all the factors that are needed to improve demand forecasting accuracy,” The Network Effect reports.

“In fact, AI provides an endless loop of forecasting, continuously adjusting the forecast based on real-time sales, weather and other factors,” the publication continues, noting that simply having access to that data could reshape supply chain spaces like warehouse management. With self-driving forklifts, automated sorting, and self-managing inventory systems powered by drones and autonomous ground vehicles, it’s easy to see how warehousing, a key aspect of any supply chain, could be affected by technological developments to a much greater scale in the near future. It’s not hard to look ahead at other logistics fields – think automated trucking or drone-based delivery services – and draw the same conclusion; AI is here, and what it looks like today will be unrecognizable when compared to its future use cases.

While the potential applications for AI in logistics and supply chain may appear to be limitless right now, it may not make sense in every situation. Where it might shine in areas like supply visibility, data analysis, demand forecasting, and supplier relationship management, it’s not necessarily a cure-all.

“Having strong, accessible data is essential, but highly- experienced personnel can provide key insights to real-time information that allow shippers to adjust planned shipments or those currently in route,” said Odyssey’s Robert Boyle, Vice President, NA Managed Logistics Services.  “To be competitive, companies need to pivot from being report producers to true business analysts. This will ultimately impact your business and produce better outcomes. Dashboards loaded with data and real-time information allow you to spend more time analyzing data versus producing it.”

Harnessing Data and Making It Actionable

In AI in the transportation industry: its perceived utility and the ground-zero reality, Vishnu Rajamanickam, points out that AI has been around in the transportation industry for a while now, but notes that only a select few companies are reaping its rewards. “It is nice to talk about AI and the results of it, but transportation companies should not implement AI for the sake of implementing it,” one logistics provider told FreightWaves. “The critical dimension has always been to see what the commercial incentive of any technology would be.”

Acknowledging that transportation and logistics companies would benefit most from AI applications that “effectively harness the millions of data points that flow through their systems and create solutions to improve productivity,”  Rajamanickam says there are also situations where AI’s role is over-anticipated.

“The trick is in finding the right balance between classical optimization and AI-enhanced approaches,” he writes, “with the latter edging ahead in capturing certain things in the logistic planning process.” In most cases, the execution of those plans will still be run by humans.

Adding the Human Element

When it comes to the AI-logistics connection, the human element also has to be factored into the equation. “Humans have a significant edge over machine learning in AI: they can handle complex trade-offs between options and be innovative by drawing on knowledge, experience, and capabilities that are broader than the typical AI algorithm,” supply chain expert Simon Croom writes in Being Wise About Supply Chain AI.

“AI is best at performing specific, clearly defined tasks, such as warehouse picking,” he continues, “it is less effective at more nuanced activities, such as developing promotion strategies and supply chain innovations.”

Croom goes on to say that AI limitations can cause problems that disrupt supply chains and customer service systems, potentially jeopardizing entire manufacturing operations. “I have witnessed new manufacturing technology mishandle entire operations,” Croom writes, “because the managers weren’t aware of the system’s capability or constraints.”

3 Things to Keep in Mind

In What to Keep In Mind About AI And Supply Chain Management, RateLinx’s Shannon Vaillancourt tells companies to remember that AI is just another tool in supply chain management, and that to be most effective, it must be integrated properly and used for the right purpose. He shares these three tips on how shippers can make the most out of AI in the supply chain:

  • You’re not replacing people; you’re empowering them. Artificial intelligence could allow your supply chain professionals to shift from tactical, time-consuming “busy work” jobs, such as verifying and sorting data, to instead creating and planning strategically.
  • AI can’t do everything. “The strategic work of planning your supply chain is too complex – and subject to too many other business variables – to be done by AI on its own,” Vaillancourt writes. However, building a solid data foundation with AI tools allows your people to leverage their experience and creativity to develop superior strategies.
  • Accurate, complete data is crucial. “If you’re working with bad data, all you’re doing is making the wrong decisions at the speed of light,” he writes, “something that could negatively impact your bottom line.”  

Your relationships with your partners are more important than ever.

“We know AI is here, and its implementations will vary widely from business to business,” Says Odyssey’s Boyle. “While you can speculate on what that may look like for your business, you can be sure that your relationship with your partner will still be a very human process, and one that you’ll need to ensure is strong enough to handle what a more automated future may hold.”

 

Odyssey is a 3PL that specializes in maintaining strong inter-business relationships and finding your organization every possible supply chain efficiency. Our technology platforms are integrated in a way that provides you with heightened visibility of your shipments at the press of a button, delivering you a full service complement that truly is “Door-to-Done”.

For more information, click here: Managed Logistics Services