Ecommerce consumers add to cart while AI helps logistics and supply chain deliver
How many of us, on a daily basis, browse through thousands of online products, add them to the cart, and then proceed to pay with little thought to how the delivery system works? Then we wait for the package with little patience. And if it does not arrive on time, we curse the logistics and supply chain system.
Logistics companies have been facing challenging times with events like the pandemic raking up online shopping or the Russia-Ukraine conflict disrupting trade routes. Artificial Intelligence, which has recently been stealing the limelight from other emerging tech (read ChatGPT), has been not just a lifesaver but also revolutionary for the logistics industry.
Consumer behaviour and ecommerce have a lot to do with this infusion of automation into the logistics and supply chain industry, which includes warehousing and customer support. Ecommerce is the biggest client of the logistics and supply chain sector, especially after the pandemic.
Many ecommerce companies leverage the power of AI to deliver without delay. Walmart uses Symbotic. Flipkart uses Ekart. Amazon uses Sparrow, a robotic system in its warehouses, while its AI, Alexa, helps in online shopping.
“Customer expectations are ever-changing and consumers of today are more conscious and demand full control over the service that they receive. Ecommerce is indeed a driving force in shaping the industry, with their demand for fast, reliable, and cost-effective delivery leading to companies testing and adopting many technologies such as drones, autonomous vehicles, and predictive analytics. Ecommerce customers also seek real-time visibility into their shipments, which AI can provide through tracking and monitoring technologies,” says Asparuh Koev, Founder of Transmetrics.
Future ecommerce has even more in store for AI. A 2022 Juniper research identified India with the potential for rapid growth in Buy-Now-Pay-Later, predicting user growth from 25 million in 2022 to 116 million by 2027. Reasons, rising ecommerce usage and growing interest in international goods available through online retailers. That’s a massive market in the near future that only digitalized logistics and supply chain enterprises will be able to manage.
Revenue in the Indian fashion segment alone is expected to touch US $19.86 billion in 2023. Bhaskar Ramesh, Director-Omnichannel Businesses, Google India commented on this at the recent India Fashion Forum.
“COVID has particularly changed consumer behaviour, and a lot of these behaviours are sticking. As COVID receded, consumers actually went back to what they were familiar with and at the same time they are expecting the same digital experience. So, on one side, digital is enhancing customer experience and on the other better profitability of businesses,” he said.
Automating logistics to do faster and better
We already see logistics companies leveraging AI for smoother operations. According to Statista, 40% of respondents in the transport and logistics industry say that artificial intelligence implementation can help improve inventory management, helping businesses create smarter manufacturing and distribution centers. That is, AI can comprehend complex real-time inventory control dynamics, predict scenarios, recommend actions, and act accordingly.
In India, according to a business intelligence report from TechInsight360, artificial intelligence (AI) spend in the logistics industry has seen a 127% spike during 2018 touching US $26.6 million. This spend is expected to record a CAGR of 41.4%, increasing from US $49.6 million in 2019 to reach US $560.2 million by 2025.
Riding the AI wave, many logistics companies have upped their game to unprecedented heights.
A case in point is the German logistics company DHL, whose use of AI supports its business goals by optimizing order fulfillment and aligning workforce skills. Deutsche Post (DPDHL), the parent company of DHL reported a pre-tax profit (EBIT) of approximately US $8 billion on almost US $82 billion in revenue in its 2021 annual report.
The company, which has a market capitalization of approx. US $53 billion, made a row of investments in AI vendors including US $300 million in 2018 for many robotics and augmented reality in the IoT focussed applications. This year, the company made a US $15 million investment in Boston Dynamics.
We also see news such as Alibaba Cloud, the digital technology and intelligence backbone of Alibaba Group, making its AI-driven logistics solution, EasyDispatch, available in Malaysia. And then there are startups like KlearNow rebranding to KlearNow.AI to boost their position. How exactly does AI help in making logistics more efficient? Cost cutting, warehousing, timely delivery, are a given, but what else?
How AI helps logistics and warehousing
There are many ways AI makes logistics more efficient from predicting demand, enhancing delivery times, to accelerating the exchange and processing of documents. But beyond the reduction of costs, timely delivery, and warehousing, it can make the work of logistics professionals easier and more customer-centric, says Koev.
“It can also help logistics companies with reducing their environmental impact by optimizing the fleet performance and ensuring that there are fewer trucks on the road due to improved capacity utilization,” he says.
Generative AI: Enter ChatGPT
A potential application of AI in logistics that can bring efficiency is based on Generative AI. Enter ChatGPT. Currently, Transmetrics has integrated ChatGPT to aid the jobs of logistics professionals.
“Our first experiments will center around the daily routine of the logistics sales agents, which very much consists of answering countless tedious emails with requests for quotations. That can easily be streamlined and bring the needed efficiency with Generative AI,” Koev explains.
Warehouse automation = Delivery within a day
Another aspect of AI is enabling is warehouse automation, which allows businesses to capture and analyse data in real time, improving the efficiency and turnaround time for e-commerce companies to serve their clients. Meaning, delivery within a day.
“Warehouse automation is evolving at a very rapid pace as most businesses are now focusing on adopting automation systems in their operations. Especially the e-commerce, 3PL and FMCG firms are specifically integrating automation solutions for their warehouse owing to the overall transformation it ushers in. As a matter of fact, a number of other industries are already following suit. While both in-bound and out-bound capacity gets enhanced, there
is also zero damage of goods and minimal human intervention,” says Khursheed Alam, Co-Founder of Atmos Systems.
World events will always impact the supply chain: Can AI help?
World events like the Russia-Ukraine war, the pandemic, and the Suez Canal incident always impact logistics. While most of them are impossible to predict with AI since there is simply no data to power such a prediction, Koev says as soon as companies start experiencing the effects of such events, AI-powered algorithms can learn from the new data, update forecasts, disruptions, and enable logistics companies to adjust their operations accordingly.
“For example, AI can help with scenario planning and propose to reroute shipments to avoid conflict zones or manage increased demand for certain products due to pandemic-related lockdowns. AI can also help companies optimize their fleet and reduce idle time, minimizing the impact of disruptions on their operations,” he says.
We can view AI as the big guns that were brought in to deal with massive crises. At the same time, the current competition in the AI market is bound to come up with the swankiest solutions for logistics egged on by ecommerce and manufacturing growth.
Navanwita Bora Sachdev is the Editor of The Tech Panda and a freelance writer.