AI Is Transforming Logistics Business: Everything You Should Know

Nov 18, 2019 Frank Hamilton Frank Hamilton

Artificial Intelligence, as we have come to see it today, has no One-Size-Fits-All Solution. Its outcomes or results depend entirely on the specific goals and needs of every organization or industry. 

One thing is sure; technological transformation has come to stay, it's left for every organization to figure out how their business and their customers can benefit from it.

As you'd expect, automation of basic tasks is now the new standard of doing business.

One industry in which Artificial Intelligence is currently making an indelible mark is the LOGISTICS INDUSTRY.

One aspect of the logistics industry that has benefited immensely from the development of artificial intelligence is the supply chain. For a lot of companies in the logistics industry, the supply chain has been a bottleneck that has threatened the very existence of the logistics industry. Wastage and gross inefficiencies characterize the supply chain of most companies in the logistics industry.  

United Parcel Service (UPS), a logistics and supply chain company, saves over 10 million gallons of fuel per year, all thanks to interventions from Artificial Intelligence and Big Data. This is just one example of how artificial intelligence has saved wastage in the logistics supply chain.

Today, the logistics and supply chain industry is valued at over 7 trillion dollars, and by 2023, this value is expected to reach 15.5 trillion dollars. Furthermore, Research conducted by Tractica, an independent market research company, revealed that the sale of logistics and warehousing AI-enabled robots is estimated to reach 22.4 billion dollars by 2021.


How AI Is Successfully Transforming The Logistics Industry

Recent research has revealed that logistics companies can get a profit of up to 1.3 to 2 trillion dollars if they support the implementation of artificial intelligence in their supply chain. 

Now, let us take a look at how artificial intelligence is transforming the logistics industry.


1. Demand Forecasting

This is one area in which artificial intelligence is making a great impact. Artificial intelligence generates algorithms that can be used to predict trends in demand with a reasonable degree of accuracy. Logistic companies need these predictive analytics so that they can make necessary changes to their business patterns and processes based on the data generated by AI. For instance, logistic companies can lose a significant amount of money if there are high demand and a limited amount of goods. AI predictive analytics can be used to remedy this setback.

AI's forecasting ability is also used to analyze and predict the following; 

The number of sales that a specific region is expected to produce.

The estimated number of delivery trucks that would be needed to support logistics and the supply chain.

The possible effect of weather conditions.

When a delivery truck or vehicle is due for service so as to avoid a breakdown in the delivery process.


2. Intelligent Warehousing

Warehouse automation is another area where AI is transforming the logistics industry. One challenge faced by many logistics firms is inventory errors, which are caused by wastage in the warehouse. AI technology is used to remedy this situation through careful analysis of inventory information and processing. AI achieves accuracy in warehouse inventory by predicting the number of products that will be in demand at a specific time; then, the company supplies those products to the warehouse. This reduces the cost of transporting and processing a large number of products that may not be needed.

One example of a company that has successfully used AI to automate warehousing tasks is Ocado. Ocado is an online supermarket located in Great Britain. In their warehouse, an AI robot known as 'hive-grid-machine' processes as much as 3.5 million items (over 65,000 orders) every week. AI robots are responsible for segregating, arranging, lifting, sorting, and moving items. The AI robots maximize space in the warehouse by keeping boxes on top of each other and ensuring that the boxes are well arranged. The robot also makes processing deliveries easier at the Ocado warehouse by placing items that are frequently ordered on top, while items that are rarely ordered are placed below.  


3. Helps With Last-Mile Delivery

Last-mile delivery is all about getting the purchased goods to the final consumer in a good time. When a customer places an order, the order is packaged, sent through the appropriate channel, and estimated delivery time is communicated to the customer. This can take humans some time and resources to fulfill this task. But AI technology achieves this process within a very short time. In some parts of the world, AI-enabled drones have been used to deliver goods to end-users.


4. Track Movement With The Use Of IoT

AI uses the internet of thing (IoT) to streamline the supply chain in the logistics industry, it does this through the following ways;

Improve fleet management.

Better analysis of environmental factors.

Track and locate delivery trucks easily.

Shipment tracking, etc.


5. Autonomous Vehicles

Self-driving vehicles powered by AI technology can have positive outcomes for the transportation and delivery process of logistic companies. When vans, trucks, and buses are automated, they can save high costs for logistics companies.  

Self-driving cars or driverless cars are a reality today. Waymo and Rolls Royce are examples of companies that have keyed into the technology of self-driving cars.  Rolls Royce has partnered with other companies to develop autonomous ships. Waymo is also leading the driverless car revolution with its fleet of integrated taxi services. 


6. Smart Roads

The development of smart roads is another way in which AI is going to have a significant impact on the logistics industry. Solar panels, sensors, and led lights are used on highways to highlight changing road conditions and to monitor vehicles on the road. Smart roads will also ensure that there is no delay in the supply chain as a result of environmental or weather conditions. 


7. Accurate Information Processing

The logistics industry is data-driven, there is so much data to be processed, and if care is not taken, a lot of mistakes will be made, which can have adverse effects for the company. There is a need to ensure that the information supplied by a customer is correct; there is also the need to verify orders and match them with the right customers. All these processes can be tedious and time-consuming. But, with AI technology, validating and processing all this information is easy-breezy. They will be completed in a matter of seconds.


8. Creates Contingency Plans

In the logistics business and every aspect of life, some unforeseen situations occur which are completely beyond human control. Most businesses are not prepared for these exigencies when they occur. However, it is in this situation that the power of AI is best revealed. AI will not only recommend an immediate solution to the challenge at hand, but it will also implement the best method through which such a challenge can be addressed. 


9. Improves Customer Experience

The development of AI technology ensures the delivery of more personalized experiences to customers. As a result, customers have more trust in the company. DHL, a leading logistics company, signed a deal with Amazon on the use of Alexa to improve the overall experience of its customers. DHL customers can ask questions about the whereabouts of their parcels. They can also ask about shipment details, and so on. In further delivering personalized experiences to customers, the role of localization and translation services like The Word Point and other brands cannot be ignored. They can be used to improve customer experience by delivering information in the local languages of customers.


Final Thoughts

Embracing AI technology for most logistics companies is no longer a luxury; it is a necessity given the overwhelming functions, time management, improved efficiency, and significant cost reduction that logistics companies will enjoy with the use of artificial intelligence.

The increasing demands in the logistics industry have alerted a lot of stakeholders to the benefits that the industry would enjoy with the use of AI.

So far, we can only say that the future looks promising for the logistics industry and AI technology. Employees can focus on core duties while leaving tedious routine tasks for the AI machines to easily execute.


Frank Hamilton is a blogger and translator from Manchester. He is a professional writing expert in such topics as blogging, digital marketing and self-education. He also loves traveling and speaks Spanish, French, German and English.

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