Artificial intelligence (AI) is arguably the most disruptive technology of the 21st century, with the potential to impact nearly every aspect of our lives. As governments and officials move to regulate the industry, businesses are looking to take advantage. One of the reasons businesses use AI is for supply chain management and optimization because the tools simulate human intelligence, and can quickly perform complex tasks which can make businesses more profitable and resilient.
Because AI can perform tasks more efficiently than humans, it also allows people to do more interesting, and often creative, work. AI tools are capable of performing cognitive functions like reasoning, perceiving, learning, problem-solving, and interacting with an environment. Some of those tasks include completing data analysis, retaining and recalling information, and developing insights about cause-and-effect situations.
These abilities are useful when it comes to supply chains because they allow AI tools to identify problems, as well as ways in which the supply chain can be improved. Businesses can benefit from this insight because it allows them to improve efficiency and cut costs.
Businesses can integrate AI into their existing supply chain to boost efficiencies by employing it to monitor product quality or quantity, manage inventory, and identify efficiencies like fuel-saving routes. Other ways businesses can apply AI to their existing operations are to: optimize shipping and delivery; manage warehouse capacity; track inventory; forecast demand to coordinate procurement; standardize processes; track and measure sustainability efforts; improve worker safety; and oversee/monitor transaction records.
Some applications for AI within supply chains include predictive forecasting, which provides a comprehensive analysis of historical data, customer behaviour, market trends and additional external factors. Predictive forecasting can be applied to information — like sales data and seasonal trends — to inform recommendations about optimal inventory levels for predicting when re-stocking should be done.
When AI is integrated into autonomous supply chains, smart devices, like sensors, are used to collect data in real time and process it automatically. This can help businesses reach decisions quicker, and be more precise in their assessments, which should lead to better outcomes. AI can monitor and analyse data to identify potential threats, and even provide risk management solutions, making businesses more resilient.
AI tools can be used to improve and personalize people’s experiences when interacting with a business. Using analytics, these tools can create profiles of customers and understand them on a deeper level — for example, by learning about customer preferences, behaviours and purchasing patterns.
Integrating all the various AI tools into a business’s processes can be a long and expensive ordeal; however, the benefits of AI can offset the additional spending by reducing a business’s operational costs. Businesses can develop and teach customized AI tools, to deal with large datasets and information specific to the business or industry.
When using custom tools, it’s important that the information and settings used to create the AI tools are accurate and comprehensive, to generate effective support; otherwise, inefficiencies baked into the system can be exacerbated. Bad inputs fed into AI systems can lead to bias and other harms — this is also important to consider, as AI tools proliferate and become more integral to people’s everyday lives.
The pandemic and large-scale disruptions in recent years — such as the cargo ship that got stuck in the Suez Canal in 2021— have highlighted the importance and fragility of the global supply chain. It’s also important to consider that the global supply chain has grown increasingly interconnected and complicated over the years, making it more sensitive to disruptions.
Transportation delays, and disruption caused by labour actions, can cost businesses millions in lost revenue, and can have significant impacts on the lives of millions of people around the world.
Concerns regarding intellectual property protection are among the roadblocks to having a more AI-integrated global supply chain. However, industries like farming and retail have been able to take advantage of the AI tools available to streamline aspects of their businesses. For example, AI can help farmers determine how much and when is the best time to reap particular crops, based on data about the soil, market trends and demand, weather forecasts, and other factors. There are also tools available to farmers to help them monitor the health and behaviour of their livestock, which can detect early signs of illness.
In retail, AI can be used to optimize inventory management to avoid overstocking and stockouts. Amazon uses AI in some of its warehouses to screen items for damage before they’re shipped, which benefits the business and the customer.
One of the most common AI tools businesses use are chatbots which can offer 24/7 customer service quickly and efficiently. Fast response times from businesses are important, because research shows that customers expect responses within 48 hours of contacting a business.
Marcus Medford | Contributing Writer