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The supply chain crisis has been in the news a lot lately. It’s not hard to understand why. The crisis has had a profound impact on all sectors and the entire global economy. It has contributed to rising prices, layoffs, productivity drops and empty store shelves.
However, there is hope on the horizon and it is coming in the form of artificial intelligence (AI). The technology improves the supply chain in countless ways, from optimizing inventory management to improving warehouse and storage processes to automating critical elements of the supply chain. If done right, supply chain AI can dramatically improve logistics at a time when every minute counts.
Early adopters of AI in supply chain management saw a 15% drop in logistics costs, a 35% increase in inventory levels and a 65% increase in service levels. This automation and optimization can make the difference between a thriving or floundering business when delivery issues arise.
Optimize inventory management
Inventory management is often both an art and a science. It requires decision makers to constantly monitor existing inventory levels while anticipating future needs. It requires managers to develop sufficient knowledge of market trends and customer behavior to identify the sweet spot in inventory planning, ensure that there are always sufficient supplies of necessary products and materials, while avoiding surpluses and waste.
This is a challenging process, which can have significant impacts on the supply chain, as effective inventory management prevents the supply line from being clogged by urgent shipments or unnecessary transports.
This is where the power of AI shines through. AI-driven technologies can provide continuous monitoring of warehouse, retail and industrial inventories, autonomously ordering new materials when inventory levels reach critical levels.
Perhaps more importantly, the machine learning (ML) capabilities of AI technologies mean that decision makers will have more up-to-date, relevant, and abundant data to plan inventory needs. This includes robust data collection capabilities on market trends, customer behavior, and related metrics to predict short- and long-term delivery needs.
Transport, warehousing and storage support
Another key challenge impacting the supply chain is the need to ensure not only that materials reach their intended destination in a timely manner, but also that stocks are in optimal condition when they get there.
This is no mean feat, especially when transporting fragile materials across a continent or around the world. However, AI-powered sensors can track individual shipments, as well as individual items within each shipment, at every stage of transportation, reducing the risk of lost or misdirected shipments.
This is just the beginning of the story, however, as AI sensors aren’t just adept at tracking locations. They can also provide accurate, comprehensive and relevant data on environmental conditions throughout the supply chain, including warehousing, warehousing and shipping containers.
This is a particularly important asset for reducing risk in the cold chain shipping and storage. Materials that must be kept at a certain temperature or humidity, such as perishable foods, medicines or certain electronics, can become dangerous or unusable if the refrigeration systems of a cargo container or warehouse malfunction.
AI sensors can send alerts to stakeholders when environmental conditions begin to approach unsafe parameters so they can take action before inventory is lost. This capability can also significantly increase trust between stakeholders by increasing visibility and transparency throughout the supply chain.
Because ML allows AI to “learn” from every action it takes, its ability to automate processes increases significantly over time. This means that not only workflows are less dependent on human labourbut they are more accurate and reliable than the product of human work.
Human error is a simple fact of life. People get tired. They make mistakes. They have physical and cognitive limitations. However, AI never gets tired.
It generally only makes mistakes if it is programmed incorrectly. His “intelligence” increases exponentially over time. This means that when you automate elements of the supply chain using AI technologies, you get more efficiency, accuracy and productivity than even the most skilled people.
In addition, the COVID-19 pandemic has shown us that human vulnerabilities can jeopardize not only their well-being, but also the health of the supply chain. Pervasive and protracted lockdowns shook the entire global economy, decimating once successful businesses and threatening the livelihoods of millions of workers.
Using AI to automate the supply chain will allow work to continue, businesses to continue operating, and products to be produced and consumed should another pandemic or other global crisis strike. If implemented correctly, business leaders and employees may never again face the terrible choice between their health and safety and their career and income.
Make business decisions with AI
Of course, implementing these AI practices is easier said than done. First, there may be overhead costs that need to be considered. On the other hand, workers may worry that new AI systems will take over their jobs, especially if they work in the industrial sector. To address such issues, it is best to approach AI with the following steps:
- Learn more about AI: As a business leader, the more you understand AI, the better equipped you are to pinpoint solutions that you can apply to your business. You can even come up with new solutions yourself. Therefore, stay up to date with the latest announcements in the field of AI technology.
- Pitch a new AI system to a team of leaders: This team can be your business leaders or just a management team. Within this pitching process you also address any overhead costs. If you find these costs can’t be budgeted for, you can go back to the drawing board to fit them in or scrap the idea altogether.
- Make your plans known to your employees: approach this with sensitivity and be open to feedback. Most automation is typical for the improvement of employees and their safety, so it is best to communicate this as well.
- Be flexible: You will inevitably have to change plans at various points in your pitching process. When this happens, be open to new ideas, especially when it comes to solving supply chain problems.
Even if this pitching process fails, you have to keep hope. AI is still a relatively new technology and it may take some time for your company and your employees to embrace it with open arms.
The takeaway meals
The ongoing supply chain crisis has taken a heavy toll on businesses, workers and consumers alike. However, AI innovations can make such crises a thing of the past. AI technologies are proving to be very useful at all stages of the supply chain. They optimize inventory management, improve warehousing and storage, and support process automation – all to drive efficiency and productivity, prevent human error, and protect the supply chain from future crises.
Charlie Fletcher is a freelance writer on technology and business.
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