As we emerge from a supply chain crisis that impacted the world for more than two years, there’s 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 the supply chain efficiency, it’s estimated that new AI technology will add $1.3 trillion to the global economy in the next 20 years. Global spending in that area is expected to surge from $1.67 billion in 2018 to $12.44 billion in 2024.
Innovations in AI are becoming integral to every stage of inventory management. On factory floors, in warehouses, on cargo ships, at cash registers, and in transport vehicles, computers are collecting and digesting 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 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 take action.
How AI Tech Impacts Inventory Management
Inventory management isn’t just about shipping goods to customers. Rather, it’s about having the inventory in place before customers even order it, which requires extremely precise forecasting. Overstocking means lost revenue, and understocking means shortages and unhappy customers.
AI software is helping businesses by learning to accurately analyze consumer demand for specific products. In addition, it reacts to changing trends, accounts for seasonal shifts, and considers regionally based demand as it stocks inventory.
By studying millions of purchases, algorithms can accurately foresee whether items will be flying off shelves or languishing in back rooms.
The technology allows businesses to get ahead of the game and keep the supply chain moving by ordering based on real-time demand, not stocking inventory according to a prediction.
When businesses are able to increase efficiency in their inventory management, they can increase customer satisfaction while decreasing expenses.
When inventory runs low, technology enables businesses to react quickly by matching them with ready suppliers. AI software maintains a database of a business’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.
Streamlining Warehouse Operations
Some of the latest innovations along the supply chain are found in dark warehouses — fully automated storage facilities that operate entirely free of human labor.
When the lights go out, the self-driving forklifts, conveyor belts and automated palletizers carry on as usual. These machines track every item stocked and leaving the warehouse by scanning barcodes, updating inventory in real time.
By eliminating the human element, warehouses can boost both speed and efficiency.
Shift changes, breaks and human error become relics of the past. Dark warehouses operate 24/7 without expensive heating or air conditioning.
AI technology streamlines every aspect of warehouse management.
Algorithms predict how long each item will be stored. Based on this analysis, those staying the longest are stocked towards the back, and those leaving quickly are kept close to the front. The size of pallets chosen for storage can vary by inches.
Such changes might seem small, but they make a massive difference in overall efficiency over thousands of orders.
Even warehouses that aren’t going completely dark are seeing increased AI technology. To meet demand, more and more storage facilities are integrating their computers and processes with automated conveyor systems and order retrieval technologies.
Optimizing the Shipping Process
As goods leave the warehouse, AI follows them to the last link of the supply chain. With the aid of innovative technology, today’s last-mile courier services can guarantee next-day, same-day and even hourly delivery windows.
Sophisticated AI 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 ties into information systems to track emerging traffic conditions.
Algorithms combine available traffic information with the list of delivery destinations. The software batches orders to create the most efficient pickup and drop-off schedule for each driver.
In seconds, it creates shipping routes optimally balanced between speed and cost savings. If a customer cancels an order or makes a last-minute change, the software adjusts on the road.
Throughout the shipping process, AI technology allows all 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 are immediately alerted as items arrive.
Today, AI remains a capable backseat driver. In the not-so-distant future, however, autonomous vehicles will likely take over the steering as well.
Innovations in AI technology are revolutionizing every aspect 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 chief executive officer of Senpex.
