How Artificial Intelligence is Transforming Supply Chain

Artificial Intelligence (AI) is quickly becoming an integral part of supply chain management. Supply chain is highly complex - delivering just 25 packages by truck has a possible 15 septillion (trillion trillion) routes, according to Goldman Sachs. "Integrating AI into the supply chain...will have a bigger economic impact than any other application of the technology and affect a larger number of businesses...” according to The Economist.

While many companies are using robots to improve the running of their factories and warehouses, AI can also transform other areas of the supply chain. Research firm Gartner revealed in a recent survey that supply chain organizations expect the level of machine automation in their supply chain to double over the next five years.

Increasing Efficiency from End-to-End

From scanning invoices and paying suppliers to predicting payments and forecasting which customers will pay late, AI can completely transform the financial aspect of supply chain. On the manufacturing side, computer vision systems can inspect products and spot flaws, ensuring quality product more accurately than humans can. For equipment performance, artificial intelligence can combine past performance data with information generated by smart sensors on the machinery, and predict when equipment might fail.

AI can also be used to predict future demands, improving inventory management and freeing up space. Companies like Amazon are using algorithms to predict demand on millions of products, sometimes 18 months into the future. Other companies use artificial intelligence to forecast what order inventory will arrive and leave the warehouse, allowing the pallets to be placed in the correct positions, boosting efficiency in moving products. 

Autonomous Vehicles

Because transportation is the key component of the supply chain, autonomous vehicles will eventually make the biggest impact of all artificial intelligence technologies. Self-driving cars use machine-learning algorithms to understand surroundings and respond accurately. Such vehicles are already in use by tech companies with an exceptionally low accident rate.

The autonomous vehicle market is expected to increase to more than 10 million vehicles by 2020, which has huge implications in areas such as haulage. These vehicles will reduce accidents caused by drivers getting tired and falling asleep at the wheel after long hours on the road.

Automation and artificial intelligence in the supply chain is the next logical step in advancing the industry toward the future. It allows companies to spend less time on the repetitive processes of the day-to-day and more time focusing on growth and innovation.

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