Artificial Intelligence and Machine Learning Drive the Future of Supply Chain

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Artificial intelligence (AI) is more accessible than ever and is increasingly used to improve business operations and outcomes, not only in transportation and logistics management, but also in diverse fields like finance, healthcare, retail and others. An Oxford Economics and NTT DATA survey of 1,000 business leaders conducted in early 2020 reveals that 96% of companies were at least researching AI solutions, and over 70% had either fully implemented or at least piloted the technology.

Nearly half of survey respondents said failure to implement AI would cause them to lose customers, with 44% reporting their company’s bottom line would suffer without it.

Simply put, AI enables companies to parse vast quantities of business data to make well-informed and critical business decisions fast. And, the transportation management industry specifically is using this intelligence and its companion technology, machine learning (ML), to gain greater process efficiency and performance visibility driving impactful changes bolstering the bottom line.

Tools reduce costs, increase revenue

McKinsey research reveals that 61% of executives report decreased costs and 53% report increased revenues as a direct result of introducing AI into their supply chains. For supply chains, lower inventory-carrying costs, inventory reductions and lower transportation and labor costs are some of the biggest areas for savings captured by high volume shippers. Further, AI boost supply chain management revenue in sales, forecasting, spend analytics and logistics network optimization.

For the trucking industry and other freight carriers, AI is being effectively applied to transportation management practices to help reduce the amount of unprofitable empty miles or “deadhead” trips a carrier makes returning to domicile with an empty trailer after delivering a load. AI also identifies other hidden patterns in historical transportation data to determine the optimal mode selection for freight, most efficient labor resource planning, truck loading and stop sequences, rate rationalization and other process improvement by applying historical usage data to derive better planning and execution outcomes.

The ML portion of this emerging technology helps organizations optimize routing and even plan for weather-driven disruptions. Through pattern recognition, for instance, ML helps transportation management professionals understand how weather patterns affected the time it took to carry loads in the past, then considers current data sets to make predictive recommendations.

Pandemic accelerates adoption of AI and ML

The Coronavirus disease (COVID-19) put a tremendous amount of pressure on many industries – the transportation industry included – but it also presented a silver lining — the opportunity for change. Since organizations are increasingly pressed to work smarter to fulfill customers’ expectations and needs, there is increased appetite to retire inefficient legacy tools and invest in new processes and tech tools to work more efficiently.

Applying AI and ML to pandemic-posed challenges can be the critical difference between accelerating or slowing growth for transportation management professionals. When applied correctly, these technologies improve logistics visibility, offer data-driven planning insights and help successfully increase process automation.

Like many emerging technologies promising transformation, AI and ML have, in many cases, been misrepresented or worse, overhyped as panaceas for vexing industry challenges. Transportation logistics organizations should be prudent and perform due diligence when considering when and how to introduce AI and ML to their operations. Panicked hiring of data scientists to implement expensive, complicated tools and overengineered processes can be a costly boondoggle and can sour the perception of the viability of these truly powerful and useful tech tools….



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