The Role of AI & Cloud in Supply Chain

By- Nishith Rastogi, Founder and CEO, Locus

For the past decade, businesses have looked for new ways to leverage Artificial Intelligence for efficiency. Most recently, language learning models such as Open AI’s ChatGPT have made quite a splash in the headlines for bringing a major leap in AI’s wide reach and applicability.

Likewise, the Supply Chain and logistics industry is no stranger to AI and its capabilities. It is a fundamental component of notable technology solutions and is key to the healthy growth of the logistics technology market. Data shows that the global value of this market is projected to grow by $46.5 billion by 2025 at a CAGR of  21.7%.

Technology solution providers have been leveraging the power of AI, along with cloud technology, to enable real-time decision-making that augments the capabilities of on-ground staff, brings about real-time visibility, and secures data insights to make supply chains more agile and resilient.

A closer look at AI in last-mile Logistics

Last-mile logistics is an ideal area for AI to showcase its capabilities. Given the complexities involved and high consumer expectations, it is one of the most expensive legs of fulfillment, forming more than 50% of all shipping costs. AI-powered technology solutions have brought benefits across all crucial operations, right from order to fulfillment. This includes:

Automated order allocation: AI solutions now have the capacity to make near real-time decisions to optimally allocate orders based on order priority, type of vehicle, and costs related to fuel, etc. This is crucial so that all vehicles can carry optimal loads and still meet the service levels for each delivery.

Efficient route planning: Route planning is the backbone of last-mile fulfillment. It has the highest scope for ensuring optimal fleet efficiency in terms of the number of deliveries and the least amount of fuel spent. Powerful algorithms are now able to take into account hundreds of real-world conditions to create the most efficient routes. These algorithms learn from deliveries made in the past and further refine their capabilities. They are also capable of making real-time changes to existing routes in response to unforeseen obstacles such as traffic jams and bottlenecks or adding last-minute, high-priority deliveries.

Facilitating returns: Returns are a crucial component of last-mile fulfillment, and if not handled well, they can further increase operating costs and even lead to poor customer experiences. AI solutions can now slot in returns on existing routes in real-time. Drivers that are returning to their home base can pick up returns along the way. This is how the customer gets a seamless return experience, and on-ground resources are effectively utilized.

Automated alerts: In most cases, it is difficult to predict uncertainties on the ground, but quickly mitigating them can help reduce their impact. Automated alerts can help improve preparedness in this regard. They can be programmed to be activated in case of potential service level breaches caused by idling or unforeseen halts due to vehicle breakdowns or accidents.

Advanced analytics: Often, existing last-mile operations contain hidden inefficiencies and undiscovered growth opportunities that cannot be discovered from superficial inspection. Powerful AI-powered analytics engines can compute trillions of data points from on-ground deliveries to shed light on these inefficiencies and growth opportunities. They are often presented in the form of intuitive dashboards and reports based on KPIs that can help companies focus.

Building a scalable technology foundation with the Cloud

Cloud technology has revolutionized the technology landscape. It has democratized business growth for technology solutions providers of all sizes without heavy capital expenditure. At the same time, the plug-and-play, API-first nature of these solutions has reduced deployment times so that businesses can see the on-ground benefits of these solutions in a matter of weeks.

Solutions providers can leverage the cloud’s diverse capabilities to experiment with new offerings, build prototypes and release them to their customers without them having to worry about updates, maintenance, or even troubleshooting. Another important development backed by cloud technology has been the shift to providing an integrated platform of offerings instead of siloed products.

This allows customers to swiftly adapt to new functionalities by incorporating necessary modules at will. An integrated system also serves as a unique source of accurate information, with its assorted solutions continually interconnecting. This seamless information flow from strategy to implementation facilitates improved decision-making. From a cost perspective, both parties benefit as they only pay for the capabilities they use.

The way ahead

 

As the business landscape evolves rapidly, supply chains will continue to improve their resilience and agility and secure new growth opportunities with the creative use of technology solutions. Because of their immense scope for innovation, AI and cloud technology will continue to play a major role in the development of these unique supply chain solutions.

AIChatGPTCloudlogistics industrysupply chain
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