Expectations for fast and accurate delivery are soaring among both retailers and consumers. The “Amazon effect” is pressuring retailers and transport providers to achieve new levels of speed and cost efficiency in transportation and logistics.
The stakes have never been higher, but at the same time it’s not a new challenge. For many years, the transportation industry has applied software, telematics and human ingenuity to balance speed of delivery against cost implications. Yet results have been mixed. Logistics leaders recognise that more payback remains to be captured in a fast changing industry.
Cognitive automation, powered by artificial intelligence (AI) and machine learning (ML), has the capacity to deliver game changing improvements in transportation and logistics, with data access and compute power far beyond what can be accomplished through traditional tools and human decision making.
Unlocking value from transportation data
Transport managers have limited visibility into the many supply chain dynamics that effect logistics performance. On-hand inventory, demand spikes, carrier availability, capacity, locations and other factors go into the equation.
Crucial data isn’t instantly accessible when a shipping disruption occurs, while transporters contend with volatile freight rates, fuel costs, port backlogs, highway construction and other variables that make up a large chunk of any company’s cost of goods sold (COGS) metric.
It’s difficult to balance all the competing factors to consistently achieve high service levels with on-time, in-full (OTIF) deliveries, while minimising costs. Meanwhile, retailers lose ground to competitors like Amazon, which uses AI and ML to predict demand for products across Australia before purchasing and stocking its warehouse, and power its supply chain.
Retailers and transport providers must explore and embrace AI in the logistics value chain. There are growing treasure troves of historical and real-time transportation data waiting to be exploited for new speed, precision and customer satisfaction.
Despite limitation, retailers and transport providers have also built highly digitised environments that function well. Cloud-based cognitive automation augments those systems with the power of AI to capture data, conduct real-time analysis and make recommendations.
Cognitive automation delivers advantages in areas including:
Transport capacity – AI makes it possible to predict and manage transportation capacity at a highly granular level, while virtually eliminating manual work and best guess decisions.
Transport lead times – AI monitors and adapts lead times needed due to volumes, wait times by ports, distribution centres, national borders, highway congestion or equipment failure.
Real-time decisions – AI insights and recommendations present clear options that make the best decisions in difficult situations.
End-to-end supply chain – Cognitive automation ties transportation and logistics to supply chain processes such as demand forecasting, production and inventory management. Logistics teams gain early warning of upstream disruptions that could impact downstream delivery schedules.
Not every retailer can match Amazon in terms of resources and investments. But fewer still can afford to sit idly by as it continues to stoke customer delivery expectations and disrupt entire industries.
Coles launched initiatives to use AI and other digital systems to overhaul its supply chain, product range, customer engagement and workforce as the retailer targets $1 billion in savings over four years.
Pernod Ricard Winemakers, one of Australia’s largest winemaking companies, also recently announced it has turned to AI software to optimise its sales, marketing and supply chain decisions.
These examples demonstrate how AI-powered cognitive automation presents an epic opportunity for retailers and transport providers to finally solve the riddles of logistics optimisation.
Those embracing AI can expect significant payback in speed, cost efficiency, customer satisfaction and market share growth. Those who stick with the status quo may find themselves dispatching delivery trucks down a dead end street.
Rajeev Mitroo is managing director – Asia Pacific for Aera Technology.