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How is artificial intelligence applied to logistics?

Technology, and specifically artificial intelligence and Big Data, are radically changing the way we understand logistics. Although many of the applications of AI to logistics are still incipient, there is no longer any doubt that this technology will eventually consolidate and, to a large extent, be one of the transforming levers of the sector.

Why is it possible to make such a categorical statement? One of the main advantages of artificial intelligence is that it makes it possible to respond precisely to the challenges facing this sector with the rise of e-commerce, the increase in distribution and storage costs, and the growing complexity of the supply chain, especially in the so-called “last mile”, where most of the costs and incidents of deliveries and returns are concentrated.

The logistics sector needs increasingly sophisticated, complex, and precise tools to optimize its activity and improve profitability and efficiency at all points in the process. And that is precisely where AI comes into play.

What does artificial intelligence bring to logistics?

First of all, it should be noted that artificial intelligence and Big Data go hand in hand, at least in terms of benefits for the logistics sector. Thus, artificial intelligence allows us to have enough data in real time to have a detailed and complete perspective of the reality of the supply chain. From here, we can not only make strategic decisions about what is happening, but perhaps the most important aspect, we can predict with incredible accuracy the behavior of markets, incidences, demand peaks, seasonalities….

In a very simplified way, we could say that the main contribution of AI to logistics is its capacity for predictive analysis, which allows us to anticipate changes and unforeseen events, and therefore improve the efficiency of the entire supply chain.

Benefits of artificial intelligence in logistics

According to a study by McKinsey & Co., logistics is the second sector worldwide that can benefit the most from AI, behind only the tourism sector: Its potential to improve the efficiency of the sector is 89%. What are the main benefits it can bring?

  1. Improved efficiency.
  2. Increased productivity.
  3. Reduction of errors and unforeseen events.
  4. Cost savings.
  5. Improved working environment.
  6. Improved relationship and communication between supplier and customer, and between the supplier and its end customer.

However, only 21% of companies have integrated AI automation into their business on a large scale, which implies that there is still a lot of room for improvement.

Applications of artificial intelligence to logistics

Artificial intelligence has countless applications in multiple sectors, including logistics, and many of them have probably not even begun to be explored. Here are some of the most widespread examples, which pioneering logistics companies are already implementing:

Automated warehouses

AI, combined with other technologies such as warehouse management software and robotics, makes it possible to optimize warehouse management by automating tasks such as transporting, placing or picking incoming items.

Streamlining the supply chain

With respect to the supply chain, AI also automates processes such as stock management, and of course enables real-time product traceability. It can also be applied to digitize tasks, for example, by applying natural language processing to the reading of invoices, delivery note numbers, packing lists, etc., which greatly speeds up the paperwork involved in the receipt and dispatch of goods.

Transportation coordination

Another of the most widespread uses of AI in logistics is the optimization of transport routes, both in the initial organization and in real time, preventing carriers from routes with incidents and offering optimal alternatives for faster deliveries. This also makes it possible to be more efficient in fuel consumption, thereby reducing both the costs and the environmental impact of transportation.

Thus, it no longer seems to be a question of whether artificial intelligence is applied in logistics or not, but when. We must make the most of the data available, ensure its quality, and have systems in place that allow us to make the most of this information. As Lisa Joy said, “today, the idea of AI is no longer science fiction, but scientific fact.”

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