The Rise of Intelligent Automation in Logistics
Digitization is transforming the vast majority of our personal and work tasks over the past decade. Logistics is not immune as automation is making the transport of goods more efficient and transparent with fewer resources. It’s not just automation, either. It’s intelligent automation backed by powerful technology that is changing the game. In fact, AI-driven intelligent automation is likely to increase by 50% in the next few years, at least according to IBM Institute for Business Value. They say many industries will depend on intelligent automation, as much as 80 percent of retailers and consumer product industries. The supply chain will never be the same.
Logistics is an integral part of the supply chain, connecting suppliers and buyers in order to facilitate production to meet customer demand. This demand places pressure on the supply chain, forcing companies to become more efficient in order to reduce costs without sacrificing quality and responsiveness to demand. Those who can’t adjust are less likely to retain customer loyalty.
Until now, efforts to plan and manage deliveries were largely manual. Logistics personnel may have had rudimentary and disconnected tools, but it has been challenging to consider all of the risks involved in every shipment. From bad weather to infrastructure outages, logistics staff could only do so much to predict ETAs or have any real certainty about on time in full (OTIF) commitments. Without reliable, comprehensive, real-time data, it is difficult for shippers and carriers to be nimble to changing conditions and know what alternatives in shipping lanes, modes of transportation and other considerations could help ensure loads are delivered on time and as expected.
Driving Efficiency through Intelligent Automation
One of the biggest benefits of intelligent automation in logistics is efficiency. Intelligent automation significantly reduces manual efforts. That means fewer resources are required to do more work. Those resources are then able to focus on other tasks that drive value and in some cases, companies can re-evaluate adding extra headcount to meet customer demand. Cost reductions are the best way to keep prices in check, particularly in an economy where people compare costs among vendors. The efficiencies gained through intelligent automation just might be the key to maintaining competitive price points.
Intelligent automation enables people to work smarter. They are suddenly able to use all of the data that has been traditionally scattered across the organization, siloed in departments, and hidden in systems that don’t speak to each other. When data is connected, it paints a more comprehensive picture – automatically. Staff no longer have to rely on manual efforts and tools, such as spreadsheets, to do their work. Instead, they have a single application that presents the exact data they need in a matter of seconds, on a visual dashboard, to perform the tasks that used to take them hours or even days.
This kind of efficiency is making a real difference in organizations’ ability to increase productivity to deliver real value without requiring additional resources. Market Research Future expects the intelligent automation market will reach approximately $8 billion in just a few short years, a 40% increase. Clearly, companies are seeing that increased reliance on automation results in an increase in much-needed efficiencies.
Resource efficiencies are just part of the story. Intelligent automation is also helping organizations in the planning process. With access to automated risk analysis and predictive analytics, logistics leaders can see exactly where risk inefficiencies lie and where shipping efficiencies can be gained. The technology instantly gathers all relevant pieces of information (including weather, infrastructure, natural disasters, social hazards, and other risk variables), analyzes them per shipment, load, and route, and then recommends the most efficient, cost-effective options. Never before has the phrase “knowledge is power” more applicable.
Even with a team of resources, this kind of comprehensive, predictive data is out of reach. Only artificial intelligence has the capacity to consider so many variables and risks as they relate to shipments in a remarkably short amount of time. Intelligent automation is giving leaders what they need to quickly assess situations and make confident decisions that directly impact profitability and customer satisfaction.
The Customer Comes First
Speaking of customer satisfaction, even with all of this artificial intelligence, one fact always remains: the customer is always right. What customers want are the parts and products they require to keep the supply chain humming. Any hiccup in shipments can have catastrophic implications for the supply chain. The last thing any organization wants is to be responsible for disrupting the flow of goods and materials that drive the supply chain. No excuse can make up for the loss of customer trust.
Customer demands are always changing, making it even more challenging for companies to meet expectations. Those who do, however, rise to the top. We have to look no further than Amazon to see how on-demand, rapid shipping has become the norm. Accenture Strategy found 62% of U.S. consumers expect orders, with free shipping, to arrive within three days. Consumer expectations drive manufacturing and manufacturing drives the supply chain. It’s all connected and if the end customer doesn’t get what they want, the entire supply chain can suffer.
As far as logistics go, intelligent automation is helping companies determine the fastest, lowest-cost routes for shipments. It’s analyzing all of the potential risks that could prevent a load from arriving on time, even assigning risk scores to place each risk into context so the most likely risks are prioritized over those that are less severe or probable. When leaders have this information in hand, literally at their fingertips, they can mitigate risks to keep customers happy. Companies without this capability are likely to lose marketshare as customers begin to expect more from their suppliers. The decision to invest in intelligent automation for logistics is up to management, but even with limited IT budget, it’s proving worth every dime.
Business leaders are under constant pressure to make decisions that impact every aspect of the business. In this fast-paced world, those decisions have to be made quickly. There is no time to run reports that require manual data collection and analysis. The agile company is responsive, nimble, and able to change course on a dime. Leaders can be proactive in planning, mitigating risk before it has a chance to cause disruption. This is where intelligent automation shines. Data is in one place, giving logistics leaders a consolidated view of what’s really going on with every shipment from coast to coast at any point in time, even showing trends over time. Decision-making is no longer based on best guesses and assumptions, but reliable, hard data.
This kind of decision-making is what business leaders want. IBM found that 54% of executives plan to invest in intelligent automation in the next three years because they expect it will improve the quality and speed of their decisions. In fact, this is the number one reason why organizations rely on intelligent automation technology. And why shouldn’t they? More than 80% of those who are already utilizing intelligent automation say they are reaping those exact benefits.
Evidence of the impact intelligent automation has on decisions is abundant. Logistics Management, for example, says artificial intelligence will play a massive role in logistics networks, saying, “The data-driven intelligence will augment future supply chain leaders’ ability to make decisions and drive strategy for logistical decisions. Historic tribal and domain knowledge will become obsolete and managers will have to adapt to new trends and drive network decisions in rapid ways to adapt to new environments.”
This insight is sobering, considering the fact that the 2018 Digital Supply Chain Executive Survey found 57% of manufacturers say their internal decision-makers are still resistant to change. For them, it may take losing customers by failing to meet expectations to change.
The Game Changer
Intelligent automation is here to stay. It’s helping logistics companies and those dependent upon logistics to be more efficient, meet customer demands, and make better, faster decisions without consuming as many resources. The technology considers all shipments, routes, cargo, and dates and then analyzes potential risks to each before presenting all viable options to minimize risks and deliver shipments on time. Data is operational, enabling leaders to spend less time gathering and analyzing data and more time focused on making strategic decisions that drive the business forward.