To help retailers rise to the challenge, the implementation of artificial intelligence (AI) technologies may be one answer. Currently, AI is making a huge difference for retail supply chain optimizations, especially as the desire for faster delivery increases and focus on tight inventory control becomes significant. A report by Capgemini estimates retailers could save as much as $340 billion by using AI to scale across the value chain. Considering these savings, let’s take a look at some additional capabilities AI can offer among changing holiday demands.
Advanced Supply Chain Networks
Integrating AI across the supply chain network delivers benefits for all parties:
- Reducing freight costs for third-party logistics businesses and their shipper clients
- Providing better upstream and downstream planning for raw material producers, manufacturers, logistics companies and other supply chain stakeholders
- Estimating internal and external costs and expenses at every stage of the supply chain
- Improving the speed, accuracy and quality of supplier deliveries
- Managing and minimizing the risk for suppliers through understanding environmental factors and other variables
- Taking corrective action during unexpected and disruptive events
Efficiency and Effectiveness for Customers
Much of the investment in AI and machine learning is driven by external pressures. For example, RSR reports that almost six in 10 retailers cite faster delivery times from competitors as a major business challenge. This pressure only increases due to the desire for instant gratification by consumers - “I want it in my size, my color, and I want it now.” Of course, these demands are intrinsically at odds with the realities of supply chain constraints, which result in long delivery timelines - as much as 60 to 90 days for products to reach their final destination warehouse in the Midwest, from its originating manufacturer in Shenzhen, China.
Despite these pressures, the speed of delivery is a major differentiating factor for winning business, and fortunately, that’s an area where AI can excel. By leveraging AI and additional machine learning technology, we can work to address this “Impedance Mismatch” by improved demand sensing and optimizing supply chain planning. Approximately four in 10 retailers currently offer delivery the same day that an order is placed. More than two-thirds of retailers are expected to offer same-day delivery within the next three years. Of course, speed is not the only competing factor among businesses, especially when quality and a great customer experience can be guaranteed. But to remain as efficient as possible, AI will help the supply chain live up to existing customer expectations.
Route optimization, automation and tracking makes transporting retail goods through the supply chain faster and easier. Examples include:
- Automating cars, trucks, ships, delivery robots and more allow for effective, self-guided robotic operations
- Utilizing multiple data sources including, in-motion with GPS tracking, to understand progress through the supply chain and optimize routing for maximum speed and efficiency
- Planning operations and movement throughout the supply chain
The extended retail supply chain still needs a little work for complete AI optimization, and focusing on data collection is necessary in order to incentivize all stakeholders to use AI as intended. But the benefits are vast. With these changes, organizations will lower costs, increase delivery speed and enhance customer satisfaction.
Steve Dowse SVP of Product Management at Blume Global