Supply Chain Discussion: The Future of AI in Transportation, Warehousing and Logistics

In this discussion, Robert Bowman from Supply Chain Brain speaks with Jim Lee, principal with the ZS consultancy. They are an American management consulting and technology company. Here, they try to separate hype from reality when it comes to what's happening with AI in transportation, warehousing and logistics.

He says that transportation, warehousing and logistics companies today are expressing multiple concerns that could potentially be addressed by AI. The top priorities include labour and transportation volatility, along with siloed execution as an “honorable mention.” “That hasn’t been effectively addressed,” he says.

How AI should be applied depends on the type of work involved. When it comes to labour, the technology can take over certain “menial” and repetitive tasks, but other responsibilities are better left to humans, Lee says.

Warehouse labour accounts for between 50% and 70% of variable expense that drives cost per unit in the distribution center, he says, so there’s “a ripe opportunity to get some real value” from AI. Applications include optimizing the scheduling of outbound shifts and allocating resources to best slot products and pallets. “It all comes down to increasing the productivity of the travel path and replenishment time,” Lee says.

On the transportation side, AI is ideal for aiding in the highly complex task of route planning and optimization. But exactly where AI would be of best value in logistics varies widely among settings. No two warehouses are exactly alike, and the type of AI to be deployed must also be determined.

For logistics operations unfamiliar with AI in any form, it can be intimidating to approach the technology for the first time. “First and forecast,” Lee says, “it’s the return on AI investment.” (Hence the acronym “ROAI.”) Users must be sure that they have established a business case for the use of AI in every instance. Failing to do so until a project is halfway along is a recipe for failure. And such calculations must be made at every step of the way.

“Really it’s just a muscle that we have to understand more,” - Jim Lee

Source: Supply Chain Brain