As we emerge from a supply chain crisis that has affected the world for more than two years, there is a pressing need to make inventory management more flexible, resilient and stable. Many companies are turning to artificial intelligence as a solution.
As a means of increasing supply chain efficiency, new AI technology is estimated to add $1.3 trillion to the global economy over the next 20 years. Global spending in that area is expected to rise from $1.67 billion in 2018 to $12.44 billion in 2024.
AI innovations are becoming an integral part of every stage of inventory management. On factory floors, in warehouses, on cargo ships, at cash registers, and in transportation vehicles, computers collect and digest massive amounts of data.
When we say that AI is being applied to inventory management, we don’t just mean that robotic machines are doing the work: AI involves machines that to learn. These machines are equipped with software that uses advanced analysis and logic-based techniques to interpret real-world situations. They communicate with other computer systems, apply intelligent algorithms, analyze scenarios and formulate responses. They strategize, make decisions, and act.
How AI Tech Impacts Inventory Management
Inventory management is not just about shipping products to customers. Rather, it’s about having inventory ready before customers ask for it, which requires extremely accurate forecasting. Overstocking means lost revenue, and understocking means shortages and dissatisfied customers.
AI software is helping businesses by learning how to accurately analyze consumer demand for specific products. Plus, it reacts to changing trends, takes seasonal changes into account, and considers regional demand as you stock inventory. By studying millions of purchases, algorithms can accurately predict whether items will fly off shelves or languish in backrooms.
The technology allows companies to stay ahead of the game and keep the supply chain moving by ordering based on demand in real time, without stocking inventory according to a prediction. When businesses can increase efficiency in managing their inventory, they can increase customer satisfaction and reduce expenses.
When inventory runs low, the technology allows companies to react quickly by matching them with ready suppliers. AI software maintains a database of a company’s suppliers and updates it with current stock. In seconds, the technology can analyze an order based on multiple parameters, such as cost, delivery speed and reliability, to suggest the best possible supplier.
Optimization of warehouse operations
Some of the latest innovations along the supply chain are found in dark warehouses: fully automated storage facilities that operate completely free of human labor. When the lights go out, automated forklifts, conveyors, and automated palletizers continue as usual. These machines track every item stored and leaving the warehouse by scanning barcodes, updating inventory in real time.
By removing the human element, warehouses can increase both speed and efficiency. Shift changes, pauses and human error become relics of the past. Dark warehouses operate 24/7 without expensive heating or air conditioning systems.
Artificial intelligence technology streamlines all aspects of warehouse management. The algorithms predict how long each item will be stored. According to this analysis, those who stay the longest are stored in the back, and those who leave quickly are kept near the front. The size of the pallets chosen for storage can vary in inches. These changes may seem small, but they make a big difference in the overall efficiency of thousands of orders.
Even warehouses that don’t go completely dark are seeing increased AI technology. To meet demand, more and more warehouse facilities are integrating their computers and processes with automated transportation systems and order-retrieval technologies.
Shipping Process Optimization
As products leave the warehouse, AI follows them to the last link in the supply chain. With the help of innovative technology, today’s last-mile courier services can guarantee next-day, same-day and even hourly delivery windows.
Sophisticated artificial intelligence software uses graph theory to simplify a city map and its moving parts into nodes, edges, and vertices. The technology accounts for peak traffic situations and links with information systems to track emerging traffic conditions.
The algorithms combine the available traffic information with the list of delivery destinations. The software groups orders to create the most efficient pickup and return schedule for each driver. In seconds, create shipping routes that are optimally balanced between speed and cost savings. If a customer cancels an order or makes a last minute change, the software adjusts on the fly.
Throughout the shipping process, AI technology enables everyone involved to maintain constant visibility of their packages and track them via GPS. They receive real-time updates as the shipment moves. Both customers and retailers receive immediate alerts as items arrive.
Today, AI is still a capable backseat driver. However, in the not-too-distant future, autonomous vehicles are likely to take over as well.
Innovations in AI technology are revolutionizing all aspects of inventory management. Thanks to emerging solutions in the way businesses stock, store and ship products, companies are increasing revenue and customer satisfaction.
Anar Mammadov is founder and CEO of senpex.