How AI Is Transforming Supply Chain Management
AI optimizes the supply chain when used in conjunction with humans, not as a replacement
The power of artificial intelligence is advancing at a rapid pace, and the technology is transforming industries, including the supply chain. With its ability to process vast amounts of data, identify and learn from patterns, and improve decision-making, AI, along with machine learning, optimizes processes, increases efficiency and mitigates risk.
Six Practical Ways AI Is Improving Supply Chain Processes
Many critical tasks in the supply chain rely on redundant, labor-intensive processes, but technology is changing that. Here are six practical ways AI and ML are changing the supply chain.
"The merger of human and machine is going to do great things for the business community."
–
Andy Moses, SVP of solutions and sales strategy at Penske Logistics
1. Route Optimization
AI in supply chain and ML in logistics can analyze historical data, traffic patterns, and external factors — such as traffic, weather, and shipper or receiver delivery constraints — to optimize route planning and scheduling. More efficient routing can reduce fuel consumption, improve delivery times, and cut costs.
2. Demand Forecasting
One of the key challenges in supply chain management is predicting demand accurately. AI utilizes algorithms and machine learning models to analyze historical data, market trends, and external factors to provide more accurate demand forecasts. The results enable businesses to optimize inventory levels, reduce overstock or stockouts, and accurately predict transportation needs.
3. Information Sharing
Data is critical in the supply chain, and stakeholders rely on each other for essential information. AI can collect and digitize information from disparate sources, such as bills of lading, contracts, and emails. Digitizing and centralizing information speeds the flow of data, reduces the risk of human error, and improves decision-making.
4. Yard Automation
Yard checks, which provide detailed information on which equipment is in the yard and where it is located, have historically been a time-consuming manual process that is only as current as the last update. However, advanced trailer sensors can eliminate the need for someone to conduct manual yard checks and provide real-time information on equipment. Additionally, information can be shared with drivers so they can find the right trailer quickly to avoid wasting precious hours of service.
5. Warehouse Automation
In the warehouse, AI can improve picking, packing, and sorting tasks, significantly reducing labor costs and improving order fulfillment accuracy. Smart cameras and sensors can identify and locate items on shelves and guide employees or robots to pick orders more efficiently. AI algorithms can also optimize picker routing, reducing travel time.
6. Streamlined Freight Bill Audit and Payment
AI can automatically extract relevant information from freight bills, such as shipping details and rates, reducing manual data entry and minimizing errors. It can also validate the data against predefined rules to identify discrepancies and ensure accuracy. AI-powered analytics can provide real-time visibility into freight and payment processes.
"Machine learning and artificial intelligence will help you think faster and see your different options faster."
– Andy Moses
The Role of Humans
While AI is improving supply chain processes, Andy Moses, senior vice president of solutions and sales strategy at Penske Logistics, said the seamless movement of goods will still rely on the work of humans to oversee the technology, combine its findings with their expertise, and make critical decisions.
“The merger of human and machine is going to do great things for the business community,” he said. “Machine learning and artificial intelligence will help you think faster and see your different options faster. Then you apply the human expertise and experience to take full advantage of the information and make it useful.”
To learn more about how to transform your supply chain, contact us.
