How is AI Transforming Supply Chain Management

In today’s hyper-connected digital world, reducing uncertainties and maximizing productivity is a priority. The 2020 pandemic and other geopolitical disruptions have shown the vulnerability of faulty supply networks can bring entire enterprises down. According to McKinsey, AI-enabled supply-chain management has allowed adopters to reduce logistics costs by 15%, service levels by 65%, and inventory levels by 35%. Implementing AI in supply chain management disrupts the industry by increasing visibility, efficiency, and optimization.

From smart simulations to automated quality monitoring, supply chain companies use AI in a variety of ways to achieve benefits. Adopting artificial intelligence is critical to evolving, adapting, and addressing today’s supply chain concerns. This blog will cover the current state of AI in supply chain management and how it will make waves in the coming years. Let’s get started.

Building smarter supply chain with AI

AI and automation have potential to change the way businesses and industries function, particularly in terms of supply chain management and the ability to respond to changing demands. According to IDC, digitally empowered competitors will disrupt 33% of all manufacturing and retail enterprises within the next three years. AI in supply chain management can help companies introduce smarter and more powerful solutions to everyday problems and create a future with greater possibilities.

Advantages of using AI in supply chain management

  •  End-to-end visibility across operational platforms, implemented systems, and data sources
  • Gain critical insights 90% faster by retrieving and correlating relevant transactional data
  • Improve collaboration, reduce costs, and gain efficiencies
  • Predict and mitigate disruptions proactively and reduce mitigation time
  • Plan and build a tech-ready system for the future with AI and its subsets

Applications of AI in Supply Chain Management

Product localization and identification 

More than 15% of retailers in the United States report at least 3% inventory shrinkage, according to Statista research. It has been a big issue, owing primarily to theft, mishandling, or other human errors. Self-monitoring cameras and computer vision technologies can help you address this problem by powering product localization and identification in your warehouse. In addition to putting cameras on your shelves, it is essential to assist your team by introducing a product identification system into your apps. A staff worker can then point their phone to a shelf, and the item is counted automatically. This saves time while also improving accuracy.

Increased fleet efficiency 

AI in fleet management improves the way transportation companies work. When combined with machine learning, AI builds predictions on driver learning habits. It promotes a safety culture, makes roadways safer, and modernizes the trucking business. The data given by AI solutions helps fleet managers make efficient decisions to increase driver safety while also tracking fleet operations. Data-driven projections also help identify potential fleet vehicle wear-and-tear. Another way AI improves decision-making is through virtual coaching, which optimizes workflow and increases fleet efficiency.

Inspection and quality control

When it comes to the quality of the items/products they buy, consumers are more demanding than ever. AI-based technologies can detect defects humans may miss through digital image processing, picture categorization, and computer vision. Uploading real-time inspections from mobile devices to a platform with AI and machine learning algorithms that analyze the data for predictive insights into product and supply system status.

Driverless Delivery Vehicles 

According to McKinsey, trucks transport 65% of the US’s consumable goods to market. However, rising freight rates and a shortage of truck drivers are a big challenge for supply chain and logistics enterprises. Automated delivery vehicles are an ideal solution to this problem and are becoming more advanced and reliable than ever. 

AI can recognize things such as pedestrians, lane markings, traffic signals, and road signs using semantic segmentation, precise 3D mapping, and object detection accurately in real-time. The autonomous truck is ready to go once the system is configured to conduct the right action at the right time, such as braking or speeding up better than a human driver, and it’s almost ready.

Intrusion & Theft detection 

AI in transport can help in a variety of ways, including keeping everything safe. AI is crucial in detecting infiltration and theft. The technology can monitor security camera activity, look for anything unusual, and recognize things of interest. AI-powered intrusion detection systems accurately identify objects based on their position, size, and movement. They go beyond traditional intrusion detection systems by utilizing a more advanced algorithm to recognize numerous item kinds while lowering the number of false positives.


Which companies use AI in their supply chain management?

Some of the biggest companies using AI to manage their supply chain include Amazon, Walmart, Johnson & Johnson, Pepsico, L’Oréal, and more. 

Will AI replace humans in supply chain management?

While many supply chain employees recognize the potential of AI, a frequent misconception is that AI will ultimately replace workers by automating data analysis and decision-making. That is not entirely correct. In reality, AI can better assist supply chain workers and managers in making more informed decisions.

What are the limitations of AI and machine learning in logistics? 

Some common challenges and limitations of AI in the supply chain include the need for specialized skills and knowledge to operate AI, lack of transparency and control, and disruptions it might cause in the labor market. However, these are minor future issues with AI advancements.

Bottom line

Supply-chain management is now more challenging than ever, but the much-awaited help is now on the way. AI will be able to deliver deeper insights to teams more frequently and at a far higher granularity than ever before. Using AI in supply chain management and logistics should now be a no-brainer if you want to improve your enterprise performance.

Ready to explore the possibilities that Ai brings to your supply chain and logistics business? Schedule a free consultation with our experts today here.
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