Supply chains are getting smarter, and not because we as human beings are growing collectively better at predicting when inventory will run out, or calculating invoices. Supply chain management is receiving a major boost from artificial intelligence.
According to predictions by McKinsey & Company, firms may see around$1.3 trillion a yearin economic value from using AI in supply chains and manufacturing. Only marketing and sales will see a bigger impact from AI going forward.
It’s understandable that big companies like Amazon and Wal-Mart will see big benefits from using AI, seeing as how their supply chains and dealings are global, complex systems. It’s harder to see how artificial intelligence can make such an impact for small and medium-sized businesses.
But AI is more than just a HAL-like computer talking in your ear. AI and deep learning are already making an impact in the supply chain space.
Here are a few ways that AI can make your business’s supply chain more efficient and productive.
A major part of supply chain management is how it helps businesses predict how much inventory they’ll need to have on hand, and when.
The carrying costs of inventorycan be a major burden to companies. In the past, in order to ensure enough inventory was on hand to meet demand, businesses simply ordered and held on to enough inventory to be sure. Costs such as the price of warehouse space, insurance, and money lost due to damaged or unsold inventory can rack up that way.
Instead, companies are trying to do a better of job of predicting the demand they’ll see, and artificial intelligence is immensely helpful in this regard. On-the-fly analysis of patterns from previous years, plus incoming information, can help businesses strike the perfect balance of just-in-time inventory.
Too many businesses arestill using manual processes to manage their inventory, or not managing their inventory at all—just winging it.
For your business to be successful, you don’t need to compete with Amazon’s ability to sell everything at low prices. But you do need to compete in terms of keeping inventory management costs low, while remaining efficient.
In two major ways, artificial intelligence can help increase the efficiency of how goods move.
On a global scale, historically the big players in global shipments (ports, container ships, etc.) have lagged behind technological improvements that made tracking a shipment difficult once it hit the ocean or arrived at a major facility. But AI systems are getting better at predicting the arrival and movement of inventory, to the point that businesses and, more importantly, customers, are aware of the near-exact location of their shipment at any given time.
Thinking more locally, from the route that pickers-and-packerstake to find inventory in warehouses, to the routes delivery drivers take to get shipments to the front doors of customers, AI is helping to create shorter and more efficient paths.
