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Source: Techniques de l’ingénieur as of 27-07-2020

All e-commerce sites and retailers put forward different arguments to seduce Internet users. In particular, the speed of delivery. To meet this challenge, they must optimize their supply chain. In particular, artificial intelligence helps to better manage the stocks and routes of delivery drivers.

“Free 24-hour delivery in relay point” for Zalando, “Express and free delivery” with the Fnac card, “Same-night delivery” for Amazon in some major cities… E-commerce sites are fighting a merciless war. And their ability to deliver as quickly as possible has become one of their main arguments.

If attractive prices and the optimization of the customer experience  remain decisive, the nerve of the trade war is to control its stocks. But the variability of demand, which has become stronger and less predictable in recent years, is a real headache for businesses! This loss of visibility, combined with new market opportunities, makes the management of industrial and logistics activity increasingly difficult to control.

And the Covid-19 pandemic has highlighted the supply chain weaknesses of many industries.

Certainly, the situation was exceptional and therefore impossible to anticipate. As a result, many products were out of stock or not a priority. However, this health crisis has revealed the excessive reliance (especially in the area of fees) on seasonal staff and that the tight flow of management obliges companies to benefit from a complete view of their inventory, but also that of their partners.

All the major sites have a market place that allows independents or small suppliers to sell their products. While this integration allows e-commerce sites to expand their offering, it requires them to closely monitor their partners to adjust their offerings in real time based on their inventory. In another headache, e-commerce giants operate hundreds of warehouses around the world.

“Today, we need to go beyond calculating monthly demand on an item. We need to be able to exploit a multiplicity of data to move towards hyper-segmentation on demand and products. The management of the supply chain is entering a new era due to the finesse of management and even the automation of certain simple repetitive driving actions,” explains Laurent Penard, president of Citwell, a management consulting firm specializing in supply chain.

Hence the need to deploy artificial intelligence  (AI) solutions to assess trends and be able to respond to sudden spikes in activity.

AI can generate two types of supply chain gains:

  • Improving customer service or even developing new services
  • improved operational performance (productivity, quality, stocks, end of life, etc.).

To achieve these two goals, AI must be able to extract the most important information, structure it and automatically classify it. In some warehouses, all movements made by autonomous robots or operators are analyzed in real time. According to DHL, the use of self-contained forklifts has “reached a level of maturity.”

In order not to waste time in deliveries, the latest traffic information is interpreted to correct journeys in real time and define the best routes. All this data is then integrated into the on-board computer of the trucks.

The first contributions of artificial intelligence to the service of the Supply Chain and its many challenges. Copyright: Citwell/Appolo

But only 12% of supply chain professionals say their organization is currently using artificial intelligence (AI) in their operations, according to the latest annual report  from the Material Handling Industry (MHI) (the leading trade association representing the handling and logistics industry).

The results of this study of a thousand professionals show that the integration of AI is progressing very slowly. The impact of the health crisis on deliveries should encourage these professionals to move up the gears as 60% say they will rely on AI within five years.

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