Can Artificial Intelligence transform the supply chain?
The logistics industry represents 12% of global GDP and is growing at a compound annual growth rate (CAGR) of 5% per year. Based on these estimates, global logistics spending will reach over $15 trillion by 2023. These estimates, coupled with soaring supply chain costs, created by the dynamics of the global pandemic, have increased the need for innovative technologies to increase efficiency and reduce supply. chain costs.
But what is a supply chain? In its simplest form, a supply chain is a sequence of processes involved in the production and distribution of goods. Although it sounds simple, billions of dollars are spent on logistics that can be reduced by automating manual processes and using machines to identify problems before they occur by tapping into millions of points of data.
Fortunately, artificial intelligence (AI) has proven to be an innovation with the potential to transform supply chains by eliminating inefficiencies and creating insights that enable more effective planning and decision-making. The question is how to effectively apply AI to supply chain processes to achieve transformative results.
Many supply chain processes require multiple documents to secure the flow of goods, funds, and information involved in the transactions that make up a supply chain. These include contracts, invoices, bills of lading, packing slips, and customs declarations, to name a few. The chance of human error, missing documents, or other issues could cost thousands of dollars in fees, not to mention a poor customer experience. Therefore, digitizing these documents and exchanging the data electronically is a key step in eliminating significant waste in the supply chain. Artificial intelligence has proven effective in digitizing paper documents and enabling paperless transactions.
Combined with Machine Learning (ML) and Blockchain, the benefits of AI have become even more impactful. For example, robotics is currently being successfully applied in many supply chain applications to automate repetitive tasks; thus, reducing personnel costs and increasing efficiency. However, robotic process automation is just the tip of the iceberg. Cognitive automation introduces new opportunities such as robotic process automation (RPA). RPA leverages artificial intelligence technologies such as optical character recognition, text analytics, and ML to improve customer and employee experiences. A specific example is the deployment of chatbot technology to respond to basic customer requests. Chatbots have reduced the cost of call centers and increased customer response times.
Innovative technologies offered by supply chain technology companies can also have a significant impact on supply chain sustainability. Using technology to quantify CO2 emissions and leveraging the data as a key carrier selection criteria can also have an immediate impact. AI can be used to strengthen end-to-end logistics execution by connecting key activities such as planning, booking, settling and tracking shipments across a vast network of trading partners. Predictive analytics, end-to-end visibility and the last mile are just some of the key areas that can be improved through the use of AI.
Finally, as AI is deployed to increase efficiency and eliminate waste in the supply chain, companies must be careful to balance these decisions with the impact they will have on customer experience and satisfaction. . They need to ensure that there are no unexpected negative effects of AI on the human experience, as this cannot be ignored.
(The author is the Managing Director of Blume Global – a supply chain solutions company)