The global supply chain is filled with several variables that add to its complexity: government regulations, ever-changing customer demand, rising transportation costs, and international events such as pandemics. Any innovation that helps improve the supply chain’s efficiency can help increase your bottom-line profit.
Artificial intelligence (AI) is one such innovation that helps optimize the supply chain by better forecasting customer preferences and cutting costs by automating some repetitive manual tasks.
IBM defines AI as, “leveraging computers and machines to mimic the problem-solving and decision-making capabilities of the human mind.” In common parlance, AI is a technology that can think like humans to solve problems.
A survey by PricewaterhouseCoopers New Zealand (PWC) suggests that AI-based applications could potentially contribute up to $15.7 trillion to the world economy by 2030.
Artificial intelligence is soaring in popularity — in fact, Gartner predicts that by 2023, 50% of IT leaders will move their AI projects from proof of concept to maturity.
Giant conglomerates such as Amazon already leverage AI to better control the supply chain. For example, Amazon has already transformed the ecommerce business through free shipping and 1-day delivery practices. It is now devising systems using AI and machine learning (ML) to automate its warehousing processes and drone delivery.
If you are considering AI-powered supply chains, here are seven benefits that could help transform and evolve your business:
The warehouse should not be treated simply as a place to store goods. Furthermore, if the items in the warehouse are not properly stored, there could be difficulty in retrieving the items when required. This in turn can increase your fulfillment time, not to mention your customers’ frustration. Instead, the warehouse should be regarded as a strategic asset that can help with storage and faster fulfillment of goods, thanks to automation.
Automation can help with the timely retrieval of goods from the warehouse and facilitate a smoother fulfillment of orders. As you keep purchasing inventory, the algorithm continues to learn from the data, and – based on this purchase and supplier data – the AI can provide stocking recommendations.
Lack of real-time information can lead to inefficient warehousing. Using a warehouse management system can offer much-needed clarity and help in streamlining your operations. A warehouse manager can get real-time insights about the various parts, components, and finished inventory stored in the warehouse, since the technology takes virtually no time to process and analyze large swaths of data.
Drones are also helping to automate warehouse operations. In movies and wedding ceremonies, drones are often used for videography from a higher altitude. At the warehouse, drones scan and capture information from barcodes and RFID tags, as well as reconcile data with your warehousing software.
Apart from scanning, the drones can also pick up inventory and aid with quicker shipping. Using drones to fetch items from higher shelves also mitigates the risk of warehousing staff injuries caused by falling from height.
Helpful hint: Apart from speeding up the work and saving you time, AI automation can reduce the otherwise required number of warehousing staff and save money that would have been devoted to payroll.
Plant managers deal with several challenges in running business operations. There can be inventory shortages, unplanned machinery downtime, or a rise in raw material pricing. All these can increase overall operational costs. If you are operating on lean margins, any activity that helps with cost-cutting can be crucial for your success. To combat such supply-demand mismatches, businesses have started implementing AI technology, leading to cost minimization and delivering a better customer experience.
Research from McKinsey suggests that after introducing artificial intelligence in their supply chain, 44% of executives reported cost reduction, and 63% had increased their overall revenue.
Helpful hint: Unlike humans, technology can run 24/7 with maximum productivity. It is free of human error and reduces workplace accidents.
It can be challenging to plan for the supply chain due to globalization, competition, increasing product varieties, and varying customer preferences. Unplanned events such as pandemic-related lockdowns and logistical issues can fuel the fire.
When final production relies on the timely availability of several spare parts and critical components, their unavailability can create bottlenecks in the supply chain. With a robust AI-powered forecasting system, businesses are equipped with the necessary intelligence to prepare themselves before such events disrupt production.
Along the lines of AI, there is a buzzword called “Big Data” that is commonly used. As the name suggests, Big Data refers to data that is huge in volume and keeps compounding over time. For example, when customers purchase items from Amazon, they browse through many products that can yield insights into their consumption patterns.
Analyzing such a massive dataset may seem unfathomable by humans, but it can be done through AI-driven tools. Intelligent systems can analyze data and guide the forecasting of supply and demand. This can prevent your business from accumulating excessive stock. A study by McKinsey suggests that implementing artificial intelligence and machine learning can reduce supply chain forecasting errors by up to 50%.
Through machine learning, businesses can also leverage predictive analytics. This way, companies can spot patterns from historical data and current buying patterns for better forecasting.
The term, “fleet,” refers to a group of vehicles owned by businesses used for transportation. Fleet management is crucial for the smooth functioning of the supply chain as it links the manufacturer (supplier) to the customer. From rising fuel costs to labor shortages, fleet managers need to tackle many challenges. Managing a large fleet can be an arduous task if the necessary information is not available in a timely manner.
Using AI in logistics can offer real-time tracking and vital information for shipments. AIcan also assist in reducing the losses arising from fleet downtime and make the most of the fuel capacity.
AI-powered autonomous vehicles are also gaining popularity. Utilizing self-driving trucks can help reduce the cost of drivers and improve efficiency. Although it is a relatively new technology, the trend for autonomous trucks is gaining traction in the US logistics market, and it will continue to expand over the coming years.
Inventory management lays the foundation of proper supply chain management. Effective inventory management can ensure a logical flow of goods in and out of the warehouse. With so many variables to consider – like order picking, packing and fulfillment – manual inventory management is time-consuming and prone to errors.
Inventory bottlenecks lead to delays and reductions in revenue. With the help of AI, businesses can gain complete visibility of supply chain variables and identify the processes that act as bottlenecks. Upon identifying bottlenecks, you can quickly eliminate them by strategically finding opportunities for improvement.
Apart from bottlenecks, understocking and overstocking are also issues that adversely affect your business. Understocking leads to losses arising from missed sales opportunities and risks reducing customer loyalty. Conversely, overstocking poses the risk of loss due to not being able to sell the inventory. Businesses can use demand forecasting (through AI) to avoid overstocking and accurately predict trends. Based on the data, the production and stock levels can be calibrated to maintain optimum inventory.
Cloud-based inventory management software can provide a centralized view of all inventory across multiple locations. With accurate information about their inventory, purchase managers can determine when to place new orders.
Thanks to technological advancements, even the purchase order process can be automated. By customizing quantity thresholds, a purchase order can be automatically generated and sent to suppliers to avoid stockouts.
Helpful hint: Machine learning algorithms can also mitigate fraud by automating auditing and inspections. Audits help to spot any deviations from common product patterns. Privileged credential abuse is another challenge that causes a breach in the supply chain, but with the help of AI technology, such misfortunes can be prevented.
What good is producing excellent products and services if you cannot deliver them to your customers in a timely fashion? Even after using state-of-the-art technology to improve your warehousing and operational processes, if you cannot ship products on time, your profitability will suffer.
Using AI in the supply chain can not only assist you with forecasting the products’ demand but can also lead to better shipping control. It factors in customer’ locations to deliver the products, along with the time it takes to ship them.
Your operations managers can get real-time information about the delivery schedules, and the team can be warned upon detection of a discrepancy. You should not overlook last-mile delivery as it constitutes around 28% of delivery costs.
Offering a stellar buying experience is essential to fostering a better relationship with your customers. Happy customers not only lead to repeated sales but also act as ambassadors to promote your brand through positive word-of-mouth.
It is plausible that your customers have questions about your product and will contact the company. If your support team makes them wait too long, the chances of them switching to your competitor are all but guaranteed to increase.
Implementing AI-based chatbots on your website can help you tackle such issues. Chatbots are available around the clock, and studies suggest they can answer up to 80% of routine questions. As the answers are already installed in the system, the bots can quickly solve the queries, allowing your support team to prioritize other projects.
Apart from answering questions, chatbots can also act as sales agents allowing potential customers to interact with and submit purchase orders.
Amazon has a fine example of machine learning to offer a better customer experience. Their algorithm helps them to provide better product recommendations based on previous orders and searches made by the customer. They also use chatbots to offer assistance regarding purchases, returns, and refunds.
Based on the benefits examined in this article, it is evident that AI can make a breakthrough impact on the supply chain. From reducing costs to optimizing operations, it can help your business outpace the competition.
As challenges in the supply chain increase, businesses will welcome the opportunity to upgrade their technology and better serve their customers. While external variables might accelerate the adoption of AI, it is already transforming from a nice-to-have to a must-have item that will help your business stay relevant and represent the standard in supply chain management.
Cin7 inventory and order management software should be your go-to solution as you pivot towards AI for your sales operations. Gain the same advantages as the top product sellers who have already discovered Cin7’s connected multichannel solution. Book a demo with one of our consultants and take a step closer to adopting the efficiencies that await.
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