Supply chains are vast networks of disparate entities that aim to act in unison to move materials and goods across geographies with the maximum speed and efficiency. This, is however, easier said than done.
Achieving peak efficiency for this moving, forever-changing network requires a 360o view of all participants and every transaction occurring between them. This is simply not humanly possible and even for the best machines and technologies available today it’s a daunting challenge.
In this article we will take a look some key areas where artificial intelligence or AI as a technology can best be used to create the most optimised and productive supply chains.
The 'Deep Blue' Experience
Artificial intelligence (AI) and machine learning (ML) are technologies that have been in development for over 40 years.
However, one of the first times most people may have heard of them was in 1997 when the AI-based IBM supercomputer Deep Blue beat the then reigning World Chess Champion Gary Kasparov.
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Interestingly, Deep Blue had played Kasparov for the first time a year earlier in 1996 and lost. But within 12 months of gaining that experience, Deep Blue's AI had learned and practiced enough to come back beat the world champion at his own game!
This clearly demonstrated the power of AI to learn and adapt - even 25 years ago. With dramatic advances in the technology today, as Mr Kasparov himself says, "You can buy a chess engine for your laptop that will beat Deep Blue quite easily."
Benefits of AI
The sheer data volume and complexity of supply chain operations make them ideally suited for AI applications. These technologies crunch and analyse massive amounts of the data generated and provide the most optimal solutions to forecast, plan and execute logistics operations.
Data Management
Supply chains today produce vast amounts of data from innumerable sources.
In the near future when IoT technology sees more widespread applications on 5G networks, this data will further explode and analysing the same will be a major challenge.
AI technologies, however, are particularly good at doing just that. In fact, thanks to their 'learning' ability, the more data they have to analyse, the better and more powerful they become.
Speed and Efficiency
AI systems are fast, tireless, quick to learn, and less likely than humans to repeat the same mistakes. Through superior forecasting, route planning and faster reactions in case of emergencies, AI systems shorten transit times while making best use of available resources.
Supply chains today are globally interconnected and a small delay at one point can create a cascading ripple of inefficiencies and delays further down the chain.
By being able to take a more holistic view of a given situation, AI systems can provide real time solutions that can prevent delays or provide the best available routing options in case the delay has already occurred.
Resilience and Reliability
Supply chain operations are the most unpredictable part of any business and proper management of the same is crucial to a company being able to function properly.
Accurate forecasting of future capacity challenges and customer demand scenarios can create more reliable supply chains which in turn foster growth and profitability for the company.
As mentioned before, AI systems are tireless and data hungry. To plan for exigencies one can feed them any number of emergency scenarios and they will provide solutions for them. In fact, the AI system itself can come up with 'just-in-case' problems and provide pre-emptive solutions for the same.
Accurate inventory management
One of the chief aims of an efficient supply chain is to maintain an optimum level of inventory across all its warehouses.
Inventory management comprises a host of operations like order processing, order picking, packing, and loading. Keeping a track of all these can be time-consuming and prone to errors.
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By using AI systems, tracking can be fully automated, and orders can be accurately placed by the system itself as and when required.
Cost Savings
If all the above areas are smartly covered and handled, the obvious outcome is lower wastage across the supply chain and better profits for companies.
Implementing AI technology in current digital systems may involve some costs but these can be quickly recovered from the benefits of using artificial intelligence in day-to-day operations.
Generative AI
This is a comparatively new area of artificial intelligence that involves human interface and interaction. It has also thus far, created the most media buzz with applications like ChatGPT and Google Bard.
However, most of the applications and benefits for the supply chain mentioned above can be derived from the more traditional forms of AI that involve detecting patterns, making decisions, data analytics and data classification.
Generative AI, on the other hand produces new content, chat responses, designs and 'synthetic data'.
This technology however, is key to creating the ideal AI-human interface by facilitating natural language commands and responses thus allowing everyday use of the technology by non-technical staff in the workplace.
Ghost in the Machine
Strangely enough, it is these very rapid advances achieved in AI technologies - generative AI in particular - that have created a certain hesitation in human beings to embrace AI and realize its full potential.
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Most people today are still not comfortable in receiving "human" responses from inanimate computers or mechanical objects like robots. This writer himself experienced a certain queasiness in his first interactions with the ChatGPT web bot.
This "ghost in the machine" phenomenon is a common human reaction to all radically new technologies probably like the shock an awe generated by the first "horseless carriage" invented by Karl Benz in 1886.
AI in the supply chain today and tomorrow
Despite this initial resistance, the benefits new technologies will be widely realised sooner rather than later and its adoption in logistics operations taken for granted in the near future.
Even today, major players like Etihad Cargo and Emirates are using it to provide better services.
In May this year, following successful trials of Speedcargo's AI solutions, Etihad Cargo rolled out three AI-powered products - Amplifi, Cargo Eye and Assemble - to boost efficiency, digitise and standardise cargo handling, and enhance service levels for customers and partners.
Speaking to the media at the launch event Martin Drew, Senior VP - Global Sales & Cargo said: "Etihad Cargo, with the launch of these AI solutions, is creating an information-rich network that connects airline operations and ground handling for better planning and decision-making.
"Creating digital audit trails of how cargo is received and handled will benefit Etihad Cargo's customers by providing a more seamless end-to-end experience and improving the productivity and efficiency of planners and ground handling partners, with the ability to handle multiple flights simultaneously."
Meanwhile, speaking at the TLME Future of Logistics Conference held recently in Dubai Maximilian Weigelt, Director of Business Development MESA at project44 highlighted how his company was using AI to provide companies with real-time visibility of their cargos even in critical times so they can take action as quickly as possible.
Keeping these developments and expert opinions in mind, we can safely infer that AI is greatly benefitting the supply chain even today and is going to play a critical role in creating the better and smarter logistics operations of tomorrow.