Even before the pandemic launched the industry into a full-blown crisis, the supply chain was a complex and cumbersome beast. Each link on the chain must perform its function with as few errors as possible, as bottlenecks at any point ripple through the rest of the chain. Using technology, we can mitigate the risk that any given link in the chain will fail, leading to a stronger and more resilient supply chain industry.
Now, as we face inflation levels of 8.3 percent, a geopolitical crisis in Europe, ongoing labor difficulties, extreme weather events and continued pressure from the pandemic, it’s more critical than ever to examine the benefits of artificial intelligence, automation and robotics in the supply chain.
These emerging technologies can streamline supply chain operations, minimize waste, make work safer for employees, increase efficiency and reduce costs in the long term.
Artificial intelligence (AI) in the supply chain uses data to make predictions, tracks products and assets and simulates situations. A report by IBM prior to the pandemic showed that organizations who invested the most in AI had higher financial performance than their peers; 85 percent of those organizations reported that AI was inevitable in their industry, and 95 percent of the highest-performing companies polled stated that AI was central to the success of their innovations.
That trend continued in the years since that report was published, and companies are investing in AI in their supply chains. According to McKinsey, the estimated impact of AI on the supply chain is between $1 trillion and $2 trillion.
One of the most common uses of AI in the supply chain is demand forecasting. Data-driven AI can be used to predict what products need to be in stock and in what quantities, which helps prevent in-demand items from going out of stock while also preventing warehouses from getting filled up with a surplus of overstocked items.
This streamlines stocking warehouses, makes it easier to predict shipping needs and increases customer satisfaction at the end of the supply chain. This type of technology can be used for a wide variety of planning tasks as well as logistics and delivery routing. Transportation is also a major opportunity for artificial intelligence and automation as self-driving vehicles continue to be developed. In an industry that is hurting for workers, this technology can potentially revolutionize how business is done over the next several decades.
Automation is used in the supply chain to do repetitive, error-prone, physically difficult or time-consuming tasks. Automation can be done with software as well as physical robots. Most commonly, automation is used in conjunction with human workers.
Automation can be used for menial and repetitive tasks like customer service by allowing software to answer simple questions such as shipping arrival times. This way, software can sort through potentially thousands of inquiries and provide answers quickly while sending off more complex questions to human customer service representatives. This type of scenario can be applied to a wide variety of data-oriented tasks.
Once the tasks that can be are automated, human workers have more time to devote to maintaining those automations and doing tasks that require human input and strategic skills. This helps us avoid wasting valuable labor hours on mundane tasks. It also helps keep workers safe from demanding or dangerous physical tasks.
According to a survey by Modern Materials Handling, the industry is currently split on the value from robotics, and 48 percent of respondents had no plans to use robots or don’t know what their future plans are. However, those that have implemented robots in their operations have by and large been able to meet their ROI goals and business case objectives. The survey also noted that robotics adopters are not replacing their workforce with robots, but using them to augment human processes.
Robots are useful in both manufacturing and warehouse environments, where they are already a popular solution. From self-driving bins to drones and articulating arms, robots are able to move faster and reach higher, complete tasks more accurately and quickly and require far less down-time than humans.
Robotics is also advancing quickly. Many robots can now move on their own and sense obstacles in their environment, and haptic sensors are in development that will simulate touch and allow robots to grasp delicate and complex items without needing to change programming. As robots become more successful in performing tasks previously done exclusively by humans, their potential for collaborating with workers increases exponentially. This will become especially apparent in the next decade as younger, more technologically-inclined generations replace the workforce across the supply chain.
Stay tuned for the next installment of this series to learn more about how automation affects specific parts of the supply chain, including the humble pallet. We will explore how automation is being implemented in our own Millwood facilities and what it means for our team members.