AI’s transformative role in logistics operations
The growth of AI opens up a range of opportunities for logistics companies
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Automation is a fundamental element of competitive success in logistics – and artificial intelligence (AI) is speeding up business transformation more than ever before. AI’s capability to enhance productivity is almost unfathomable, with knock-on contributory effects on efficiency, profitability and economic growth.
According to 2023 statistics from the US International Trade Administration, the UK AI market is worth more than £16.8 billion (over US$21 billion) and is expected to grow to £801.6 billion (over $1 trillion) by 2035, while government research suggests that around one in six UK businesses has embraced at least one form of the technology.
This growth in AI adoption opens up a range of opportunities for logistics companies, and the application of AI to logistics operations is a trend that should expand the frontiers of the sector in the coming years.
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Business process automation and data insight
One area ripe for enhancement through AI adoption is business process automation. Taking the data from today’s connected devices and systems, AI can provide transformational insights to be managed by robotic process automation (RPA) solutions. In this way, simple and repetitive operational tasks, usually performed manually by employees, are automated, which generates opportunities to embrace more strategic value-added tasks.
Automation in the areas of logistics and supply chain optimization also opens up a new world of potential for companies through the analysis of large volumes of data – spotting trends, changes and anomalies in real-time and making decisions that result in tangible business benefit.
Watch Lee Bogner, Mars Inc., discuss the importance of data in AI
With the help of AI, we can accurately predict the demand for goods and services and generate possible scenarios from current market conditions. This will allow logistics companies to allocate resources efficiently, plan transportation routes and optimize inventory levels, which results in a significant reduction in the operating costs that present a management challenge.
For players in the sector, having a tool that offers predictability, while allowing them to reduce costs and overcome possible hurdles in operational processes, is strategic and makes it an indispensable resource for the coming years.
Incorporating AI in logistics
There are several reasons for logistics businesses to incorporate AI and machine learning-based connectivity tools, which can be implemented as part of an incremental approach to the technology.
- High return on investment by reducing mileage, fuel consumption and driver time, thus increasing productivity. Thanks to machine learning techniques, more deliveries can be made with fewer vehicles, resulting in significant savings. These improvements not only affect the operational aspect, but also have an impact on the administrative processes of logistics including customer service, customer retention, availability and visibility for all departments involved.
- High availability combined with security. The software-as-a-service (SaaS) model is a trend that is increasingly being adopted by businesses. This approach eliminates the need to acquire, install and maintain software, as it only requires the payment of a monthly fee that allows access to various functionalities that are always updated and in compliance with current and emerging regulations such as the EU AI Act and data protection standards.
- Integration into a single system. Integrating all platforms with a single provider offers several advantages such as the ability to prioritize tasks according to their importance, including route planning, last-mile execution and delivery confirmation. Integrated route planning can also combine information on customer restrictions, vehicles, service windows and routes, as well as the definition of rest stops and other details that allow you to create an optimal route with continuous and real-time optimization and customer alerts to provide the best possible customer experience.
- Global visibility of traffic (both customer and order). Today’s technology offers real-time visibility into trucks, routes, orders and customers for all functions of every organization. This makes it possible to compare what is planned with what is actually being executed, identify driver locations and evaluate their performance. In addition, analytical tools can be used to generate reports and dashboards, facilitating route management and adjustments.
Watch Lisa Williams, global operations talent strategy and employee experience director, manufacturing and engineering operations at Dow, reflect on embracing new technology
The implementation of AI in logistics operations represents the next crucial step in the automation and optimization of processes in this sector. With its immense potential, AI will be an indispensable tool defining the future of transportation and logistics. However, integrating these tools into existing operational systems and adapting business processes to maximize their benefit is key.
It is essential to be willing to adapt and acquire new knowledge and skills to be prepared for the changes that AI will bring. Its strategic adoption will allow businesses to stay at the forefront of the competition and meet the demands of an ever-changing and evolving market.
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