by Transcorp InternationalAI in Logistics: Applications and Benefits
The logistics industry, from global operations to last-mile fulfilment centres and deliveries, is
experiencing a technological transformation, with Artificial Intelligence (AI) leading the way.
AI, in logistics, has become not just a trend but a core component of modern supply chain
management, optimizing operations from warehousing to delivery. AI’s role in logistics
centers on revolves around enhancing efficiency and accuracy across the supply chain.
By leveraging AI technologies, companies can streamline operations, reduce costs, and improve
service delivery. This has been the case with top companies around the globe, Walmart,
Siemens and Unilever that have sought AI tools to deepen their relationship with existing and
established suppliers, engage with new suppliers during unexpected disruptions, and
automate negotiations with ‘tail-end suppliers’ and others. Here are some key applications of
AI in logistics:
- Predictive Analytics: Predictive analytics utilizes data, manually or using machine-
learning algorithms, to predict future trends and events. It leverages historical data to
project potential outcomes, aiding in the formulation of strategic decisions. AI-driven
predictive analytics are crucial for demand forecasting and inventory management. By
analysing historical data and identifying patterns, AI systems can predict future trends
and consumer behavior. - Route Optimization, or what professionals in the field refer to the lifeblood of modern
logistics, AI enhances delivery logistics through advanced route optimization. AI
algorithms analyze numerous variables: traffic patterns, weather conditions, and
vehicle conditions to determine the fastest and most fuel-efficient routes while
decreasing their environmental footprint. - Autonomous Vehicles and Drones hold promising opportunities once integration
challenges as regulatory hurdles, public perception, and interoperability between
different autonomous systems are overcome.
Autonomous vehicles, including drones and self-driving trucks, are becoming
increasingly important in the logistics sector. These technologies promise to
revolutionize last-mile deliveries and warehouse operations by automating tasks that
are typically labor-based and costly. Based on a 2018 Mckinsey report ‘Technology
delivered: Implications for cost, customers, and competition in the last-mile
ecosystem’, automated vehicles or semiautomated vehicles will exponentially reduce
the delivery costs in cities up to 40 percent. The per-parcel cost of the last-mile
delivery will be dramatically reduced thanks to the autonomous vehicles’
technologies.
- Real-Time Tracking and Visibility: ‘Your order is out for delivery’ brings joy to
every customer; however, end-users have become increasingly restful in tracking their
parcels. AI promotes enhanced tracking of shipments and assets in real-time,
providing businesses and customers with up-to-date information on the whereabouts
of their goods. - Intelligent Robotics in Warehousing: In the warehouse, AI-powered robots are
increasingly used for picking and packing orders, managing inventory, and handling
materials.
The integration of AI into logistics brings numerous benefits, significantly impacting
operational efficiency and customer satisfaction such as cost reduction as it helps reduce
costs by optimizing resource allocation and reducing waste. It also speeds up processes like
delivery and customer service with real-time updates and faster delivery times meet the
growing customer expectations for quick, reliable service while also minimizing human error
in inventory management and other human-based tasks. AI solutions also adapt to varying
scales of operation, allowing businesses to manage growth effectively without a proportional
increase in operational costs or complexity. AI leverages different variables to ensure cost
reduction, time-efficiency, environmental sustainability, and enhanced decision-making.
Dave Waters, Associate Professor of Metamorphic Petrology at the University of Oxford,
declared “predicting the future isn’t magic, it’s artificial intelligence.” AI is not only
predicting the future it is shaping the present. AI in logistics is not merely a futuristic concept
but a present-day reality that is reshaping the industry. As AI technology continues to evolve,
its integration into logistics will deepen, further enhancing efficiency, reducing costs, and
improving service delivery.
References
Corp, M. (2023, October 28). Reimagining Route Optimization: AI and Machine
Learning in Truck Routing. Medium. https://medium.com/@muftarcorp/reimagining-route-
optimization-ai-and-machine-learning-in-truck-routing-d96164dccfa1
Dock, D. (2024, April 4). Revolutionizing Logistics: The Impact of Autonomous Vehicles
and Drones. https://www.linkedin.com/pulse/revolutionizing-logistics-impact-autonomous-
vehicles-drones-dock–rcymc/
Hoek, R. (2023, November 21). How Global Companies Use AI to Prevent Supply Chain
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ai-to-prevent-supply-chain-disruptions
Heid, B., Kässer, M., Klink, C., Neuhaus, F., Schröder, J., & Tatomir, S. (2018, August
27). Technology delivered: Implications for cost, customers, and competition in the last-mile
ecosystem. McKinsey & Company. https://www.mckinsey.com/industries/travel-logistics-
and-infrastructure/our-insights/technology-delivered-implications-for-cost-customers-and-
competition-in-the-last-mile-ecosystem
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