AI in Logistics – The Future of Seamless Supply Chain Management

Mayur Panchal
blog updated dateUpdated Date: Apr 22, 2024

ai in logistics guide

Like every other domain, AI in logistics is gaining traction and investments. Supply chain and logistics companies eagerly anticipate widespread AI adoption, with innovations like generative AI taking center stage.

gen ai usage in logistics

A Gartner survey indicates that 50% of supply chain leaders plan to implement generative AI capabilities. 14% of the Gartner-surveyed respondents have already implemented AI in logistics, which shows that AI adoption is increasing rapidly.

But why is AI so attractive for supply chain businesses?

Is it investment-worthy?

And how do we implement it?

Rest assured, implementing AI in logistics is not a distant dream but a practical reality that can be achieved with the right strategy and tools.

This article discusses potential use cases, benefits, challenges, and strategic implementation of AI in logistics. By the end, you’ll be inspired by AI’s potential to transform your logistics operations.

What is AI in Logistics?

Artificial Intelligence(AI) in logistics uses advanced machine learning(ML) algorithms to optimize automation and improve predictive analytics and demand forecasting. Supply chain and logistics companies can leverage deep learning and ML models to analyze large amounts of data.

Custom-built AI models trained on large datasets gathered across logistics operations can help organizations with real-time insights. Organizations can use this data to optimize operations and use AI to automate several tasks.

The Transformation of Supply Chain Management With AI

Automated warehouse operation is a significant transformation AI has brought to logistics and supply chains. AI-powered warehouse management systems can automate sorting, picking up products, packing, and organizing inventory.

The system leverages AI models to guide robots through a real-time monitoring system consisting of cameras and sensors. Many businesses also adopt AI in transportation and logistics operations on the last leg of the fulfillment process.

automatic driverless truck

Driverless trucks are not a distant dream now, with startups like Einride taking giant leaps in automated deliveries. The deployment of driverless trucks at GE Appliance’s manufacturing plant is one of the prime examples of AI in logistics.

It is an automatic driverless truck deployed across 0.3 miles with an ecosystem of AI cameras and loading/unloading robots at GE’s automated warehouse system. However, AI’s use in logistics operations is not limited to driverless trucks or warehouse automation. Many areas of supply chain and logistics operations can benefit from its usage.

Already Using AI in Logistics? Let’s Optimize Your Strategy Further

5 Key Areas Where AI is Revolutionizing Logistics Operations

Supply chain and logistics operations include inventory, deliveries, distribution, and warehouse management. However, before implementing AI in these operations, it is paramount to identify the critical areas for improvement.

1. Making Demand Forecasting Efficient

Integrating AI in logistics can help businesses improve demand forecasting efficiency. Traceability and demand forecasting become essential for logistics operations for perishable goods like frozen food.

With AI, you can trace inventory and demand forecast shelf life of different frozen foods with recommendations on specific changes needed in the storage system.

Similarly, AI can help you identify how users use your application or interact with your business. It can also help you understand what products are in demand. Thus, you will better know which products to stock for an upcoming high-ticket season.

2. Warehouse Automation For Faster Deliveries

AI-based warehouse systems can provide real-time insights into inventory levels. It helps maintain an optimal stock of products in demand.

You can create a connected system of predictive analytics, demand forecasting, and warehouse automation. AI-based models will analyze data from multiple cameras, sensors, and embedded software on machines.

Based on the data, these models can create streamlined workflows that automate critical tasks like

  • Shipping prioritization of products
  • Matching order requests with the picked inventory
  • Supplier performance tracking
  • Process flow mapping
  • Guided paths for automated retrieval machines

3. Optimizing Transportation Routes For Efficient Deliveries

Using AI in transportation and logistics can benefit organizations by allowing them a higher fuel economy and route optimizations that reduce delivery time.

So, how does AI ensure optimal fuel economy and faster delivery time?

Access to geographic map data, vehicle information, and constant monitoring through multiple sensors on goods-carrying trucks can help with large datasets. By training custom AI models on large datasets, you can build custom AI models.

Combined with Google Maps APIs and access to live sensor data on fleet vehicles, these trained models can help with route optimization. Optimal routes mean shorter transportation spans, less fuel, and faster deliveries!

4. Predictive Maintenance for 99.99% Uptime

Predictive maintenance enables you to schedule activities, ensuring higher uptime for machines. Custom AI models can be trained on empirical data and information from real-time operations to predict future downtime.

causes of unscheduled equipment downtime

One key benefit of AI in logistics is reduced machine failure rates. According to a report, mechanical failures and aging equipment significantly contribute to unscheduled downtime.

While manually inspecting, monitoring, and maintaining each machine can be challenging.

You can implement AI in logistics operations to ensure machines used for pickup, retrieval, transportation, and sorting can be monitored.

AI helps predict the equipment’s age, allowing businesses to determine the right time to get a new one.

5. Real-time Alerts For Your Operations

Logistics companies face a massive challenge while managing stocks, deliveries, and machine failures. Real-time alerts can help businesses ensure no unscheduled downtimes due to machine failures.

Plus it also allows supply chain businesses to monitor truck delivery fleets efficiently ensuring timely deliveries. Using AI in logistics and supply chain operations ensures you can access real-time data on SC errors or machine issues.

This means instant solutions, reducing the cost of maintenance and downtime. AI is transforming predictive maintenance, offering real-time data insights, and helping logistics businesses minimize downtime. However, these are not the only benefits of AI in logistics.

Benefits of Integrating AI in Logistics

  • Implementing AI in supply chain and logistics operations can help improve data analysis and processing precision.
  • AI enables higher efficiency through data-driven decision-making, reducing the judgemental errors humans can make.
  • Using AI-based systems, you can reduce safety risks in logistics operations, leading to improved productivity.
  • Optimal delivery routes provided by AI can help in efficient deliveries enhancing customer satisfaction.
  • Leveraging AI integration, you can reduce operational costs drastically and improve profits.

Now that you know how AI is transforming the logistics and supply chain business with crucial benefits, it’s time to implement it!

Step-by-Step Guide on Implementing AI in Your Logistics Operations

Many businesses are still figuring out how AI is used in logistics across use cases. However, implementing an AI model becomes easier and clearer with the right strategy.

1. Determine How AI is Used in Logistics

The first phase of implementing AI in logistics operations is straightforward. Identify the critical use cases for integrating AI and create a roadmap for implementing it.

Take an example of an automated warehouse management system. If you want to build a computerized system of connected devices with the integration of AI, identify critical components like

  • What tasks do you want to automate?
  • Which machines do you want to monitor?
  • How will these connected devices co-ordinate?
  • What are the key areas in which to implement the AI model?
  • How much data will you have to manage for such a system?

These are vital questions you need to consider before planning for AI integration into your logistics operations. Once the roadmap is ready, it’s time to prep your systems for the AI model.

2. Data Preparation and Getting Systems Ready

The Second crucial step is to prepare your systems for AI integration. This includes data collection, cleansing, and processing for AI model training.

Some of the critical data aspects to consider are:

  • Data sources
  • Quality of data
  • Data ingestion checkpoints
  • Volume of data
  • Data security

Once you prepare the data based on different aspects, define key parameters for AI model training and system monitoring. Another significant factor is environment configuration. Make sure your system environments are configured for AI integrations.

You must assess the current infrastructure and the requirements of AI integrations before developing the system.

3. Developing Your AI Model For Logistics Operations

Developing a custom AI model for your logistics operations is iterative. Define the parameters according to the systems’ scenarios during the logistics operation. Ensure you have a complete structure ready for the training process.

The AI model training process involves multiple iterations using inferences. These inferences help AI models derive knowledge from existing data on logistics operations.

AI models are trained for predictive maintenance, demand forecasting, real-time data analytics, and other use cases based on the dataset created.

4. System Evaluation and Deployment

Once AI models are trained, they are evaluated based on the pre-defined metrics. Evaluation is an ongoing process involving AI implementation in supply chain and logistics operations.

After the initial evaluation, create a minimum viable product for the embedded software and integrate AI.

Use an iterative process to improve software delivery and efficiency of continuous operations. When you make the AI-based system operational, continuous monitoring becomes crucial.

Make sure you track automated systems using AI across logistics operations.

5. Fine-tune AI-based System’s Performance

Continuously monitor the AI model performance and fine-tune it with new data. Collect feedback on the AI-based solutions used in logistics and address critical challenges.

Here are some tips you can follow,

  • Conduct pilot tests for different scenarios in your logistic operations
  • Track route optimization accuracy of AI-based system
  • Create a framework to collect feedback on the performance of AI models
  • Analyze the feedback and identify key patterns of errors
  • Update the AI-based solutions with advanced features and implement new processes
  • Monitor the performance continuously and adjust the system based on feedback
Ready to Implement AI in Your Logistics?

AI in Logistics: 5 Use Cases You Can Consider!

AI in logistics has several use cases, from smart delivery allocations to better visibility of operations.

1. Smart Delivery Allocations

Every logistics business must handle varying operational needs, from delivering to remote areas to ensuring timely deliveries. You can allocate deliveries smartly to assets near remote regions using logistics AI.

You can also use AI to determine which third-party services to use for specific deliveries. For example, a delivery service like Blue Dart is best for heavy shipments, while DHL services are best for high-value goods.

2. Optimal Routes

A significant use case for AI in logistics is route optimizations, which is especially helpful for companies dealing with same-day deliveries.

Take the example of Amazon, which provides same-day deliveries. Handling logistics and supply chain challenges to deliver goods on the same day needs an advanced system.

Using AI in logistics operations, you can ensure faster deliveries through route optimizations. AI models fetch data from traffic sensors, GPS tracking devices, and weather forecasts to help identify optimal routes.

3. Autonomous Equipment

AI enables autonomous vehicles and equipment to operate 24/7 without breaks. They can also operate in adverse weather conditions, armed with sensors to adjust their functional capabilities.

Autonomous delivery vehicles use AI for guided operations, leading to minimal human intervention. For example, many companies are now using AI-based drones to deliver goods.

ai enables autonomous vehicles

Amazon Prime’s MK30 is a prime example of how autonomous delivery vehicles can deliver goods within an hour, facing adverse weather conditions.

4. Visual Data Analytics

Logistics companies have automated machines with multiple cameras that capture visual data from the surroundings. AI models help in visual data analytics, processing, and instant triggering of responsive actions based on this information.

This allows automated machines to reduce errors, avoid accidents, and improve product quality. You can also leverage AI-based systems developed logistics app development services to inspect product packaging and ensure no damage.

5. Product Return Management

Managing returns is a significant challenge for many logistics companies, especially when identifying why a product was returned. However, you can efficiently handle returns by leveraging AI in logistics and supply chain operations.

You can customize the AI models to identify key reasons for returns, evaluate return requests, and check quality issues.

Now that you know use cases and how to implement AI in supply chain and logistics, it’s time to understand the challenges you may face.

Implementing AI in Logistics: Key Challenges to Watch Out For!

  • If you implement AI, the initial setup cost will be higher.
  • Ensuring data security is another significant challenge when your AI model is trained on a large dataset
  • Maintaining human oversight on AI models still exists due to the need for more innovations In logistics and supply chain operations.
  • Infrastructure restrictions become a challenge for most logistics companies while implementing AI-based solutions.
  • Operational expenses of training, maintaining, and fine-tuning an AI model can be significant for any logistics business.

Overcoming these challenges requires a strategic implementation approach. First, you need to ensure your systems are ready to integrate AI systems.

For example, you need a cloud assessment to understand the infrastructure gaps before implementing AI in logistics. This is where a strategic partner like aPurple can help you with end-to-end solutions, including system assessments for AI integrations.

Future of AI in Logistics: 3 Key Trends to Look For!

From advanced demand forecasting to dynamic pricing and hyper-personalization, AI trends in logistics are continuously evolving.

1. Dynamic Pricing With AI

Delivery and shipping prices often fluctuate due to varying market conditions. Logistics companies use advanced algorithms to determine these prices accurately. However, you can go beyond the estimation aspect by enabling dynamic pricing with AI.

Using AI in your logistics operations, you can change the prices of deliveries on the go depending on specific conditions. This allows logistics businesses to improve profits.

2. Advanced Drones

AI enables logistics companies to optimize deliveries with automated drones. Minimalizing the need for human intervention, these drones are redefining the entire delivery process.

Going forward, innovations in drone deliveries will be the future of AI in logistics, improving delivery speeds, accuracy, and accessibility across terrains.

3. Hyper-Personalizations

Logistics companies can leverage AI to personalize customer deliveries. Whether you want to cater to custom packaging or user preferences, AI can help provide a personalized delivery experience.

Customized delivery solutions will be a significant trend in the future of AI in logistics. It will allow businesses to personalize shopping experiences, improving conversions.

Take Your Logistics to the Next Level with AI!!

Getting Your Shipment Ready!

Over the years, logistics companies have sought a technology to transform operations and improve ROI. With the introduction of AI in logistics, companies are now improving operational efficiency and maximizing ROI. AI leverages advanced large language models and deep learning technologies to empower businesses with automation.

It has been transformative for logistics businesses with better predictive maintenance, demand forecasting, and route optimizations. However, there are challenges of scale, setup, and infrastructure.

This is where aPurple can help you.

  • Overcome the challenges of AI integrations.
  • Provide end-to-end AI model training and evaluations
  • Offer tailored software solutions for logistics operations
  • Ensure accuracy through fine-tuned AI models

Contact us to learn more about AI in logistics solutions that we offer!

FAQs

How Can Small Logistics Companies Begin Implementing AI?

Smaller logistics companies must first analyze their existing infrastructure, equipment, and systems to ensure their systems are ready for AI integration. Cost analysis is also crucial for such companies due to the high initial setup costs of AI in logistics.

What Are the Most Significant Risks Associated With AI in Logistics?

Some of the significant risks of using AI in logistics can be data security, safey of employees and higher cash crunch for businesses. Due to overspending on resources in developing an AI model from scratch your budgets can dwindle. Plus, securing data is complex with AI-based logistics solutions.

What Are the Most Promising AI Use Cases in Logistics?

The most promising AI use cases in logistics include optimized route planning and scheduling and predictive maintenance of equipment. Apart from these, real-time demand forecasting, intelligent inventory management, and automated warehouse operations are also crucial use cases of using AI in logistics.

What is AI’s Impact On Logistics Operations?

AI in logistics operations enables system automation and optimizations. It improves resource utilization, increases order fulfillment, and enhances customer experiences.

What is an Example of AI in Logistics?

One key example of AI in logistics is Amazon testing delivery drones that use AI algorithms and sensors to navigate urban environments, deliver packages, and avoid obstacles.

Mayur Panchal
Author
Mayur Panchal is the CTO of aPurple. He is passionate about tech trends, clone apps, on-demand app solutions, and innovations across various domains. He loves to share his expertise through engaging content and inspiring others to discover the future of the IT world.
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