More intelligent algorithms might also be able to account for accessorial charges on an address-by-address basis. Then, sellers could price and forecast shipping options accordingly. Some logistics companies leverage AI to improve delivery density, Sowmya says. Suppose a logistics provider has two packages to deliver to a residence on Friday. Using AI, the logistics provider can offer its customers—the sellers—a discount if they ship additional packages to the same or nearby addresses within a set timeframe, reducing shipping costs for all. With assistance from AI, supply chain professionals can more precisely target drivers’ arrival times to minimize downtime at warehouses and distribution centers, says Ann Marie Jonkman, global vice president, industry strategy with software solutions provider Blue Yonder. This is especially valuable when schedules are upended due to unforeseen events. While this data has been available, it often wasn’t possible to access it quickly, Jonkman says. With AI automation, information can come together more quickly, accelerating decision-making. Artificial intelligence could also play a role in detecting cargo theft. Theft rings have become quite sophisticated, says Darin Miller, national director, marine, at Sedgwick, a global claims administrator.
says Benjamin Harvey, Ph.D., founder, and CEO. Before the order was executed, the AI solution would run a simulation identifying the percentage that could be actually filled, and showing which, if any, pieces of the order were missing. The company could then decide how to obtain the items. Only once an order was 95% filled would it be processed. TRANSPORTATION Streamlining transportation is another use for AI. Deciding between the tremendous number of available shipping options can quickly grow complex. While many companies already use straightforward algorithms for rate shopping, it’s possible to layer in intelligent algorithms. For example, a traditional algorithm would simply query multiple sources to obtain real-time rates from various carriers and rate cards, and then assign the cheapest one within the desired class of service. A more intelligent algorithm could understand cost and time trade- offs on each order, and present different options to shoppers at the point-of-sale, based on their delivery information. If some customers knew they could cut shipping costs with a different class of service that added only 12 hours to the delivery time, some would take the trade-off.
forecasting can drive revenue growth by minimizing the risk of both over- production and lost sales. In other areas, the usage of AI is more about driving cost efficiencies. These are important as well from a profitability perspective, but might be smaller at first sight, he adds. In addition, the demand and supply planning and forecasting functions all involve tremendous amounts of data and numerous menial tasks. AI solutions can perform these tasks, freeing planners to focus on larger projects, says Richard Davis, chief executive officer with Demand Chain AI, a provider of supply chain and demand planning solutions. MANAGING INVENTORY When it comes to inventory management, AI can analyze seasonal trends and purchasing patterns, helping companies better anticipate demand and more intelligently position inventory closer to customers. This accelerates delivery, cuts costs and boosts customer satisfaction, says Sowmya Mullur Rajagopalan, vice president and head of travel, transportation and hospitality, Americas with Tata Consultancy Services. AI Squared, a software company that enables businesses to integrate AI models into their existing software, worked with a client to leverage AI in order fulfillment,
DISPENSING SMART TECHNOLOGY Fastenal, an industrial supply chain company, supports business-to- business products and services. Through its vendor managed inventory service, it can observe customers’ inventory status and determine when it’s time to restock. To accomplish this, Fastenal leverages technology. The company provides technology-enhanced coil vending machines that offer general maintenance, repair and operations products and safety supplies such as gloves and safety glasses. Because employees access the items electronically, a company can collect data on how various products are being used—say, tying a product to a department or project. The system also leverages AI to enable companies to bring together data from different technology product offerings, so it can be analyzed. This is key, because if a company for instance, buys fasteners for a production line from five providers, that means it has five places where data is stored and organized, and five different ways to share data. Fastenal consolidates this information into one available repository, improving data quality for decision-making. The solution then uses AI to speed data analysis throughout the supply chain. “This drives better
decisions because of the amount of information AI can process versus a human,” says Jeff Hicks, the company’s vice president. For instance, the solution can assess whether changing inventory levels would lead to more stockouts. By leveraging AI, Fastenal can also help clients understand how their inventory is moving. If 100 items were used during the month, the AI solution can determine if the items were used at once or in sets of 10. The answer might influence purchasing.
February 2025 • Inbound Logistics 29
Powered by FlippingBook