Artificial Intelligence can target inefficiencies throughout the supply chain, leading to a more sustainable future for commerce.
May 23, 2019
Artificial intelligence isn’t just the stuff of science fiction — it’s a force of good across many industries, allowing us to modernize the way we do business and to push our businesses into the future. Some of the best usage cases for artificial intelligence come from the retail supply chain, and solutions in one part of the supply chain can have a ripple effect throughout the supply chain, leading to a more sustainable supply chain throughout. Running a lean supply chain is crucial in this day and age because of especially fierce competition, and it takes scrutiny from customer level forecasting through warehouse management through optimized delivery to make supply chain strategy work.
Demand Planning Is The Key To Supply Chain Network Optimization
At every stage of the supply chain there are opportunities to optimize and to do better. Manufacturing flow management involves forecasting ordering demands and ensuring you distribute shifts economically and avoid peak utility costs to shave off as much excess as possible in the manufacturing process. Inventory control in the manufacturing process means not having excess inventory sitting around, but rather manufacturing efficiently on an as-needed basis. Artificial intelligence can help with forecasts in demand, forecasts for peak utility costs, and labor forecasting to ensure the entire process is as efficient as possible.
In the retail stage of the supply chain, demand planning of inventory control means not over ordering, as excess inventory is money sitting around. Artificial intelligence can track both inventory and customer ordering patterns to ensure that orders can wait until they are absolutely needed without carrying too much excess inventory in a warehouse.
Demand planning in shipping and logistics looks a little different from these first two stages, however. Artificial intelligence can help forecast demand for things like equipment maintenance to ensure that trucks are never broken down on the side of the road full of packages to be delivered. AI can also be used to optimize delivery loads, ensuring empty truck space is cut to a minimum. In 2018, empty truck space accounted for 18% of all the mileage for one shipping company, and eliminating wasted space is key to reducing shipping costs.
Eliminating Waste In The Supply Chain With AI
No matter how great humans are at communication, machines are always going to be better in many respects. Humans are subject to human error, and while machines are only as good as their programming, they are unlikely to forget the pallet of widgets they just ordered last week and reorder them again in error. Artificial intelligence can track information across departments to ensure nothing goes unnoticed and that all variables are taken into account for each and every decision it is asked to make.
71% of retailers say that sharing information across departments is very important to their business. This type of information can lead to reductions in costs throughout departments when information is processed effectively. This includes:
- Labor Cost Reduction — altering the production schedule to ensure workers aren’t asked to do overtime and work is evenly distributed across shifts
- Reduction in Maintenance Costs — collecting and analyzing data from equipment can ensure fewer breakdowns and delays
- Augmented Intelligence Automation — giving repetitive tasks over to machines not only saves on labor costs, it can also prevent repetitive strain injuries in human workers. This technology can also ensure the right employee is deployed for a given task.
- Predictive Supply Chain Management — knowing what’s on hand and what customers will want and when they will want it is based on AI’s knowledge of prior ordering cycles and current inventory and customer behavior
Artificial Intelligence May Make The Difference
Retail, and especially eCommerce, are crowded spaces these days. Customers have more options than ever before, and one bad delivery will send them looking for a new supplier. It’s more crucial than ever to have what the customer wants, when they want it, and to get it shipped out as soon as possible. But in order to compete you must be able to do all of these things as efficiently as possible. Artificial intelligence gives businesses the means to target inefficiencies throughout the system and to address them and make them strengths instead of weaknesses.
In 2017, U.S. businesses spent $1.5 trillion on shipping and logistics, and that’s just one piece of the enormous supply chain pie. To build a more sustainable supply chain, looking at all pieces as a whole is crucial. Learn more about artificial intelligence and the sustainable supply chain from the infographic below.
Brian Wallace is the Founder and President of NowSourcing, a leading infographic design agency in Louisville, KY and Cincinnati, OH which works with companies ranging from startups to Fortune 500s. Brian runs #LinkedInLocal events, hosts the Next Action Podcast, and has been named a Google Small Business Advisor for 2016-present.