Supply Chain Gets Smart with Artificial Intelligence
Artificial Intelligence is truly revolutionizing every aspect of the world, from public institutions to private, affecting each and every industry. Logistics is no exception to the universal reach of AI. Therefore, supply chain can overcome many of its risks and gaps by the applications of AI.
Artificial Intelligence is simply intelligence that is displayed by machines. The machines’ learning and action-based potential copies the autonomy unlike conventional process-oriented intelligence. In other words, AI is the simulation of human intelligence by computers. The 3Vs of big data or the core of AI is the ability to recognize volume, velocity, and variety. This in turn is used to find correlation among massive data.
Most experts categorise AI into two blocks-Augmentation and Automation. The former assists and aids human beings with their routine tasks while the later operates independently without having to rely on human intervention.
Supply Chain Adapting to AI
Back in 2010, a research predicted that supply chain management would gain immensely from the applications of artificial intelligence. The research suggested various ways in which this could happen-setting inventory safety levels, transportation network design, purchasing and supply management, etc. Thanks to the exponential growth of AI over the last decade, these things have been made possible.
The tools that AI offers in the sphere of logistics have been deemed to have huge potential for augmenting the top-line and bottom-line value. There are the 6 applications of artificial intelligence that supply chain management can foster:
Forecasts and Analysis
Any industry is highly dependent on the supply chain planning which forms an important part of the respective business’s supply chain strategy. Artificial intelligence steps in when it can enable forecasting within the inventory, or demand and supply. Additionally, machine learning can boost the agility and optimization of the decision-making involved in supply chain management.
With artificial intelligence, the SCM industry can come up with the best possible plan of action which is determined out of algorithm and machine-based analysis.
If a business sells sanitary equipment, it can use an AI based tool to predict the demand of each of their products on a daily basis. AI does so by analyzing the historical sales data of all the models and the data so delved into includes date and time of purchase, number of items purchased, and other information.
The machine learning tools can learn the peculiar trends in terms of seasonality, or type of product and it also considers factors like weather data and news events that might have affected the sales of a particular period.
Warehouse Execution System
A reliable warehouse and inventory management is one of the most significant aspects of supply chain planning. An industry-specific yet universal challenge that businesses incur is either overestimating or underestimating the required stock.
Artificial intelligence based algorithms and data have such a streamlined predictive capacity, that it can forecast supply and demand as mentioned before. This feature of AI can be applied to supply chain management for overcoming issues that lead to shortage or excess of inventory.
Another way in which AI can be used for this industry lies in using the tools of localization and mapping. Automated Guided Vehicles (AGVs) in warehouse management have had issues in the past but with a machine vision, AGVs can operate automated material handling in a traditional space like buildings.
In fact, Warehouse Execution System (WES) utilizes AI to make the supply chain systems more efficient.
Logistics and Shipping
In today’s day and age, customers and clients expect accurate and timely delivery. But that has pressurized the companies to the extent that they now look to better their shipping and logistics facilities. Companies indeed prefer to mark an improvement here because they benefit while making customers satisfied at the same time.
Artificial intelligence enables faster and more accurate shipping which lowers the transportation expenses. In the present context, AI has also allowed companies to turn to environmental friendly operations and reduce labour costs. The best examples have been set by Amazon and pizza delivery chains which have turned to AI based drones to deliver their products to their customers.
Profitable supplier selection and maintenance of a sound professional relationship with suppliers is yet another important work for businesses. With the advent of certain factors like sustainability, CSR and supply chain ethics playing a role in the decision making of supply chains, businesses have to choose the perfect supplier.
Even a slight complacent decision can snowball to reduction in goodwill and bad PR. Thankfully, AI and its almost magical use of intelligent algorithms has enabled firms to have access to supplier-related data. The companies can now check real-time data about their suppliers like history of operations, location, previous clients, etc.
Chatbots for Customer Satisfaction
Companies are always in dire need of a reliable but foolproof system of customer communication and correspondence, which can at times determine their reputation and rapport with their past, present and future clients. Customers often face forced waiting time for answering their queries or have to converse with people multiple times.
AI gives a solution to this problem by providing conversational interfaces (or chatbots) which could provide multiple advantages to businesses. To name a few, chatbots can reduce the cost of transactions, sales cycle time, as well as enhance customer loyalty. The chatbot response machine powered by AI has a multi-dimensional interface in which it considers factors like the context of the issue, the history, and customer response management.
Decipher Untapped Information
AI and Machine Learning have a versatile set of elements and one of them is used to convert foreign data in a standardized format. This element is called Natural Language Processing (NLP).
NLP is an immensely resourceful application for logistics. NLP navigates through data of customers, competitors, regulators and suppliers to find compelling answers for business needs. In fact NLP is versatile in itself as it can be utilized for speech recognition, question answering, reputation monitoring, ad placements, market intelligence, and regulatory compliance.
In the supply chain management sector, NLP is most useful in deciphering data that is in a different language, thus enabling companies to understand more about a foreign subject like a supplier.
Supply Chain Gets Smart with Artificial Intelligence
Evolving SCM with Artificial Intelligence
Artificial Intelligence has made its presence felt in a positive way across every sector and industry. The challenges faced by supply chain management strategies and operations are now dissolvable with the help of artificial intelligence and machine learning. The system and algorithms put forth by AI grows and evolves with every unit of data, making it more and more independent of human intervention whilst being as close to human behavior as possible. The future is right in the hands of those who utilise the wonders of artificial intelligence, and supply chain management can bag this opportunity.
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