The Future of Artificial Intelligence (AI) in Supply Chain

From virtual assistance to self-driving cars, there are already several ways in which consumers can or soon would be able to benefit from Artificial Intelligence (AI). In the past couple of years, AI is also making its presence felt across a number of business processes. For instance, AI is now commonly used in supply chain management and logistics in a number of ways to improve efficiency, decision making, and speed.

As per a recent report by McKinsey, businesses could gain $1.3 trillion to $2 trillion a year by using artificial intelligence in supply chain and manufacturing. While a lot of businesses across the world are already experimenting with AI, what is in store for AI and supply chain in the future. What are the other ways in which this technology could further improve the supply chain?

1. Automated Data Collection from Warehouse Equipment

If you want to make sure that the equipment in your warehouse function flawlessly, you’ll have to focus on their maintenance and repair cycles. With the help of AI, data collection can be automated to help businesses know exactly when any equipment would need repair or maintenance.

Sensors are installed on your warehouse equipment which has maintenance records and analyzes the same to try and predict the right time to repair the equipment. As per a McKinsey report, this can help businesses reduce the maintenance cost by 10% and improve productivity by 20%.

2. Improved Inventory Management

Inventory management is probably the most complex aspect of supply chain management. For managers, it is often tough to predict products that they should or shouldn’t keep in stock. Artificial intelligence can be used for predictive modeling to help supply chain managers better anticipate their stock requirements.

Predictive modeling examines consumer trends to help you get a better visualization of what you need to stock and stocks that are in excess and not required. This can help you free up valuable space in your warehouse and also considerably reduce the revenue loss incurred due to the unavailability of a product.

3. Complete Automation

While automation and AI go hand-in-hand, most of the business processes which use AI still require human intervention to some extent. Going ahead, AI would be able to completely take over many different types of business processes and eliminate human intervention.

With regards to supply chain and manufacturing, a common example is the use of robots for performing crucial steps in the manufacturing cycle. As per a research by Loup Ventures, the demand for industrial robots is expected to increase by 175% by 2025.

4. Data Sanitization with Natural Language Processing (NLP)

The working of AI abundantly relies on the data it collects. Thus, it is essential for the data collected to be in a form that could be used for data processing. Natural Language Processing (NLP) is one of the latest elements of AI that is being used in supply chain management.

It collects all the foreign language data, deciphers it, and then streamlines it in such a way that you can use it for taking crucial business decisions. Without sanitizing the data first, the sheer amount of data collected by a logistics company would make it impossible for them to take any important decisions.

5. Combining IoT with AI

AI itself is a pretty disruptive technology for the supply chain. But when combined with IoT (Internet of Things), its possibilities are boosted further. By combining the two, businesses can create supply chains that are completely autonomous, self-governing, self-determining, and self-aware.

ABB, a leading global engineering company, is working on ABB Ability, an IoT-powered platform. The platform is focused on predictive maintenance and conditioning monitoring and will be connected to the spare-parts ordering system. The system will anticipate stock requirements, understand the reason for the stock shortage if any, and thus trigger a spare parts order to keep the manufacturing unit performing smoothly.  This can help prevent expensive shutdown costs and setbacks for manufacturers.

The Future Outlook

As you can see, the future of AI in supply chain and logistics seems to be comprehensive and compelling.

Many large businesses are already experimenting with the different ways in which they can use AI, and it is only a matter of time until businesses of every size, and from every industrial sector, would be using this technology to improve their supply chain and ultimately increase their revenue.

Meet the Author

Rajendran headshot

Rajendran Nair

Chief Marketing Officer
Rajendran has over two decades in enterprise software in roles ranging from development to product management to marketing. He was most recently at Rootstock, the leading ERP for Manufacturing on the Salesforce platform. At Rootstock, he was responsible for driving topline, streamlining sales and marketing operations, and substantially increasing market awareness including favorable positioning in four major analyst reports.