December 7, 2023

Modern Logistics Optimization with AI

The more logistics is driven by big data and customer expectations the more the field optimization is required. AI approaches to industry challenges have proved their relevance and will result in profitability increase of 44 percent by 2035 according to Accenture.

Written by
Yuriy Pulyaev

Before the technology starting to enter the logistics processes the field was in a kind of dead-end on the road to efficiency on the operational and financial levels. The digital transformation is giving a push the scope towards the goal supplying it with required concepts, methods, tools and resources. according to the scope 2024 trends, the tendency is already irreversible.

Serving retail and eCommerce that constantly aiming for higher customer engagement logistics providers are more dependent on end-user opinions nowadays since they contribute not only to their own but stores and brand image. This situation brings more demands for the cooperation parties including workflow optimization.

Integration of business intelligence helped to discover gaps and weak spots in the processes of various significance defining the logistics optimization problems to resolve. AI development allowed providing custom solutions for different business aspects that are able to improve either analytics accuracy or certain procedure running.

Using achievements of robotics and artificial intelligence in logistics and supply chain for business process automation is no longer optional for enterprises whether they are one of the big players or represent the SME sector. Therefore considering the significance of required internal changes and financial contributions it’s important to know why and what the company needs.

AI Logistics Optimization: challenges and solutions

The quality of performance of any solutions provider is initially defined by the strategy and the ability of the workforce to implement it in the given conditions. It demands high precision from planning and forecasting as well as the high qualification of the staff, especially on the management level.

The application of AI in logistics and supply chain allows addressing the challenges of these key aspects and particular elements that complete the connection between manufacturers and retailers. Explore where the technology already can bring changes.

Strategy and risks

Machine learning as a subset of AI in logistics industry can help establish data analytics from multiple resources in real-time conditions. Data science approaches that using ML algorithms like deep learning for enhancement of existing statistical methods allow performing required complicated calculations for defining numbers and directions to aim in the selected period.

Establishing advanced data processing within the company allows raising the accuracy of strategic planning and ergo improving risk management. It implies predictive analytics that with ML models takes into account more factors since some of which can neither be defined nor estimated manually.

Resources and facilities

Transportation and warehouse logistics optimization with AI concerns not just organizational processes like scheduling, routing, space planning, tracking, etc. Difficulties regarding them are usually resolved with software customized for the needs of a particular enterprise. Such management systems (MS) use or generate analytics reports to find suitable solutions.

Automation also reaches the processes that have always required human maintenance like driving, loading, lifting and other delivery tasks within facilities or on the roads. Self-driving.trucks, drones, robots, other devices managed by ERPs or an appropriate MS can ensure a seamless workflow that will result in minimizing errors with order handling.

Workforce and security

Optimization of performance tracking, auditing and reporting can be as well done through automation ensured by AI and IoT solutions. They simplify routine procedures allowing focusing on other tasks and improving the efficiency of communication and collaborations between employers, managers, departments and even partners.

Integration of workforce management systems allows injecting AI-driven anti-fraud and anti-theft solutions without affecting established workflow. Computer vision gives the ability to minimize the human factor in the security issues outsourcing to them required monitoring, analysis and alerting. Such approaches also allow setting the various levels of access for employees.

Reliability and reputation

Now trustworthiness of service providers for both clients and partners is defined by required transparency and timeliness. Local application of corresponded AI solutions that is leading to global logistics optimization already results in the increasing level of visibility and performance of the scope companies allowing them to raise the engagement and status.

To ensure such dynamic logistics should take the current trend of retail to personalization making connections with customers using multiple channels and in particular mobile devices. Machine learning methods allow implementing a custom approach to orders and forecasting of the following needs proclaiming a user-friendly reputation of the service.

Income and expenses

Optimizing with AI logistics transportation, warehousing, and the whole enterprise resource planning results in cutting expenses on operational, staffing and HR needs as well as the ones caused by returns, damages and other risks. The internal ecosystem becomes more flexible and yet more predictable minimizing unseen spending and exceeding the budgets.

Although initial stages of the company's digital transformation can be extremely challenging the efforts will be rewarded with an optimal business model and the income raise with time releasing finances for further development and growth. Addressing the majority of factors that define profit in the logistics industry artificial intelligence brings an enterprise closer to cost-efficiency.

According to Accenture annual growth rates in 2035 will equal the retail and reach 4.0 if now and in the future logistics optimization becomes an integral part of the economy. Higher readings will have only fields that affect domain development: IT, manufacturing, and finances.

Such dynamics encourage not just the integration of AI solutions but also resolving concomitant difficulties concerning the significance of investments: ethical prejudice, business conservatism, and different MS conflicts. Namely unevenness of process automation and service optimization is the most significant factor that is slowing down the GDP increase.

That’s why along with the further development of neural networks, image detection, ML models, etc. digital transformation in logistics should include a propagation campaign and global regulating system, perhaps, even on the government level to point the universal direction for the companies for the whole field benefit.

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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