December 7, 2023

Machine Learning in Logistics

See how the latest developments in machine learning and supply chain management transform logistics in B2B and B2C organizations. Learn about the benefits of machine learning in logistics and what this technology holds for the future.

Written by
Serhii Uspenskyi
CEO

Table of Contents

Businesses of all types and sizes need a robust logistical system. Without one in place, they risk running out of products. Worst yet, their supply chain can break down, halting manufacturing or delivery of vital components. Organizations worldwide deal with these challenges by introducing machine learning in transportation and logistics to daily operations.

Products based on this technology automate and improve many integral logistics and supply chain management processes. Our guide is all about the use of machine learning-based tools, their practical applications, and where the future of this technology may lead.

Why Use Machine Learning in Logistics?

Modern organizations seek to get their hands on advanced machine learning solutions due to several benefits they introduce.

  • Cost reduction. ML tools are game-changers that help companies reduce logistics expenses by 15%. These solutions minimize the need for employees, eliminate the possibility of human errors, and stabilize the entire logistical process.
  • Better adaptability. Current machine learning solutions allow organizations to better adapt to route changes, market conditions, demand patterns, and other factors.
  • Enhanced decision-making. ML tools gather and analyze vast data volumes, improving the quality of decisions made by company owners about daily operations. 
  • Real-time tracking. The introduction of supply chain machine learning products makes it easier to track incoming and outgoing shipments. With their help, businesses quickly address disruptions, track where the products are, and provide delivery estimates.
  • Risk management. These solutions help companies assess and address risks related to transportation routes and suppliers, letting organizations properly deal with issues before they arise.

Machine Learning Technologies Used In Logistics

Modern machine learning and supply chain solutions use several leading technologies that are crucial in task automation and data analysis.

Computer Vision

This component allows computers to find and identify objects in video feeds and images. Computer vision helps track inventory levels and recognize damaged products and packages. Robots use this technology to navigate warehouses and transport items.

IoT (The Internet of Things)

The combination of ML and IoT technologies leads to products that gather, process, and analyze enormous amounts of information from web-connected devices. With its help, machines predict product demands and optimize supply chain routes.

Predictive Analysis.

The use of machine learning in transportation and logistics is only impossible with this component. Predictive analysis lets modern tools make decisions based on historical and current data. An accurate assessment of this information allows companies to estimate delivery times, transportation costs, and potential issues.

Machine Learning In Logistics Market Statistics

According to the latest statistics the logistical machine learning market rose to $38.11 billion in 2022. It's expected to reach $771.38 billion by 2032. During the same period from 2023 to 2032, its CAGR will reportedly grow by 24.09%. A recently published study by McKinsey shows that using ML-based solutions improves service levels by 65% and inventory levels by 35%. Here's what the ML market looked like in 2022.

10 Best ML Use Cases in Logistics

While companies have different ways of using logistics and supply chain machine learning products in their daily operations, ten use cases are most popular for all types of businesses.

  1. Autonomous delivery drones.

Organizations use ML technologies to enhance delivery drones’ control and navigation systems to cut shipment time and find safer travel routes. Machine learning technology provides them with real-time data on obstacles, traffic patterns, weather conditions, terrain, and other information to ensure easy navigation.

  1. Demand predictions.

With the power of ML, businesses get reliable forecasts based on historical data. These solutions assess information about past orders, customer behavior, traffic patterns, weather conditions, and inventory trends, allowing businesses to better prepare for periods of higher and lower demands.

  1. Dynamic pricing.

Combining algorithms and predictive analysis allows ML solutions to adjust shipment rates based on real-time data. Businesses use this information to make effective pricing strategies and provide customers with the best offers.

  1. Fraud detection.

Advanced ML models evaluate data patterns to find potentially fraudulent actions and payments. These tools help companies deal with new types of fraud that might have flown under the radar in the past, preventing customer data breaches and financial losses.

  1. Predictive maintenance.

Modern vehicles use data gathered from onboard sensors and external factors to identify when a particular car requires maintenance. This information allows logistic companies to address malfunctions and avoid costly or unexpected repairs.

  1. Route optimization.

ML transportation solutions determine the most efficient routes through data analysis and traffic patterns. Using this real-time information, they find the fastest ways to get from one location to another, cutting down delivery time.

  1. Self-driving delivery vehicles.

Modern ML solutions are embedded in autonomous vehicles to help them navigate the cities and rural areas autonomously. They reduce fuel usage and labor costs and warn drivers about any unexpected driving conditions.

  1. Supplier relationship management.

Companies in the logistics industry can integrate supplier relationship management tools with ML technology. This combination helps predict client behavior and preferences that can influence supplier relationships. ML tools also provide information about customer loyalty and demand patterns.

  1. Warehouse management.

Companies use this technology to improve warehouse management. The use of machine learning and supply chain tools allows monitoring of inventory levels, fulfillment rates, shipment time frames, and stock availability. Machine learning solutions lead to more efficient warehouse operations and fewer lost shipments and delays.

  1. Workforce planning.

With the help of machine learning solutions, companies have an easier time planning and managing their daily staff needs. They use customer orders, shipment demands, and traffic patterns to predict the best delivery times and ensure an adequate number of employees during peak and low seasons.

5 Best ML Use Cases in Supply Chain Management

In addition to logistics, modern machine-learning tools help companies better organize their supply chains. These products have five use cases that make them irreplaceable in this area.

  1. Better supply chain visibility.

Companies use machine learning to track shipments and see the entire supply chain. With these tools, organizations quickly respond to disruptions, offer accurate delivery estimates, and track item locations, fully transforming the customer experience.

  1. Product quality control.

Machine learning tools let businesses inspect packages and containers for any damage received during their journey down the line. These supply chain machine learning helpers cut costs on maintaining a large inspector staff and reduce the chances of customers getting faulty or defective goods.

  1. Return management.

With machine learning algorithms, it's possible to predict product returns better. They help organizations better manage the return process and optimize the different components of reverse logistics.

  1. Supplier risk management.

Modern businesses utilize machine learning products to analyze vast amounts of data to forecast risks with different suppliers. This information helps organizations identify potential disruptions based on external factors, including geopolitical issues or financial instability.

  1. Streamlined production planning

Companies combine machine learning and supply chain organization to optimize the production process. It's possible to use existing data to pinpoint areas that lack efficiency or lead to excessive waste. ML technology also helps businesses prepare for and deal with disruptions.

Machine Learning And Logistics: The Future

The name of the game of any modern business is automation and resource optimization. The potential of machine learning in transportation and logistics goes beyond enhancing existing software applications. The likes of Amazon and Google show this by researching autonomous vehicles, delivery drones, and warehouse robots, further improving their adaptability and efficiency. Here's what to expect from these tools in the near future.

  • Autonomous robots will become better at picking, packing, and transporting goods from one part of the storage facility to another. This results in fewer incorrect orders and improved delivery time in B2C and B2B organizations. Recent numbers produced by AI Multiple show intelligent machines improving inventory levels by 35%.
  • The market for self-driving trucks is going to grow due to the high demand for reliable and fast deliveries. In 2022, the autonomous truck market was valued at $301.2 million and is expected to reach $1.16 billion by 2032. It will grow as companies move to more environmentally conscious practices.
  • Businesses will continue investing in and developing package delivery drones. Recent studies show that the market for these products will grow from $1.97 billion to $11,66 billion between 2023 and 2028. With the right approach and enough training, these drones can deliver postal, food, and retail items. The development of larger models will also make them capable of carrying bigger orders.

Recent developments show that the adoption rate of machine learning-based products will continue to grow in the coming decade. As this technology becomes more accurate and powerful, it will allow companies to focus on the big picture, save billions in costs, and let professionals working in these fields handle the most important tasks.

Customer retention is the key

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What are the most relevant factors to consider?

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Don’t overspend on growth marketing without good retention rates

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What’s the ideal customer retention rate?

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Next steps to increase your customer retention

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