Artificial intelligence may seem like nothing more than the latest business buzz phrase, but chances are you have interacted with AI in the past week and you didn’t even know it. AI has the ability to analyze vast amounts of data and give us answers we could not have come up with on our own, at least not in the short time it takes artificial intelligence to comb through a massive amount of data and pick out the relevant points. This type of data analysis has major implications for a wide array of problems in the business world. One of the most promising areas AI is transforming is the supply chain.
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Supply Chains Are Difficult To Manage
eCommerce has taken over the retail world. Shoppers now have more options than ever. This presents unique challenges for retailers, because if you make even the slightest error your customers have plenty of other choices. Many customers shop on the basis of shipping options – 75% would choose another retailer over Amazon if they were offered better delivery options. Customers want:
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Updates on shipping progress
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Flexible delivery options
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Faster deliveries
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Real-time visibility of delivery
Unfortunately, all these options also mean that 90% of customers will expect a full refund and will take their business elsewhere if they don’t get delivery on time, as expected.
So the options are to keep an excess of inventory on hand for orders that haven’t yet been placed and to ship them out the very second they are ordered, or risk losing customers by not having merchandise on hand and sending it immediately.
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Artificial Intelligence Fills In The Gaps
AI can be a major advantage to retailers here. It can learn buying patterns to enhance the supply side of eCommerce, only buying the inventory needed to fulfil sales forecasts. AI can also streamline shipping routes so that more deliveries can go on a single truck and they can all get there faster and more efficiently.
Algorithm-enhanced shipping can cut $400 million a year out of eCommerce’s shipping costs, while also cutting CO2 emissions by 100,000 metric tons per year. UPS Orion is a prime example of using this type of artificial intelligence to cut waste from the shipping system.
AI can also reduce costs to the entire eCommerce system by allowing shared data to pinpoint inefficiencies in the system. Altering production schedules in the supply side can save on excess labor costs as well as excess energy costs. Knowing when to fix vehicles and do preventative maintenance can prevent costly breakdowns and delays in shipping. AI can free workers from repetitive tasks, freeing their energy for more pressing matters.
Learn more about how artificial intelligence can streamline the supply chain from this infographic.
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