Innovation, Technology

HOW ARTIFICIAL INTELLIGENCE CAN IMPACT ON THE SUPPLY CHAIN

26/07/2021
HOW ARTIFICIAL INTELLIGENCE CAN IMPACT ON THE SUPPLY CHAIN

As we all know by now, Artificial Intelligence (AI) is the ability of machines – especially computer systems – to perform tasks commonly associated with human intelligence. Since the term was coined, back in 1956 at a conference in New Hampshire, AI has become a trending topic spanning various sectors. Many are its applications but what mostly interests us is its implementation within the supply chain.

The capabilities of AI are already significantly increasing companies’ efficiency in the areas of predictive demand, warehouse management and operations costs. Intelligent systems can rapidly process and analyze a huge number of data thus guiding companies to be more proactive by allowing them to forecast new consumer habits and anticipate demand trends. Intelligent algorithms can also minimize the risk of overstocking, reduce the need for additional warehouse staff and – generally speaking – optimize speed and accuracy which, in turn, lead to lower operational costs.

The downside of its application in our sector is linked to a series of challenges that are still to be solved. Typically, AI systems are cloud-based and powered by expansive bandwidth which requires costly hardware. Significant investments – both in terms of money and time – need to be done also in training personnel during the integration phase. If predictive analytics solutions are already in place in some areas of the logistics sector, there is no denying that professionals who make sense out of the data produced are still scarce. Last but not least, maintenance of AI-operated machines can also be expensive and so might be the overheads, impacted by the possible amount of energy involved.

Still, Artificial Intelligence is revolutionizing the world of logistics thus proving to be essential to innovating supply chain transformations. AI entails a holistic approach that demands us to (re)set our priorities as far as investments in technology, processes and personnel are concerned. To get them right, more collaboration is foreseeable in the next few years between logistics companies and AI providers.

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