Can AI Streamline The Supply Chain?

Hard working, sustainable businesses need hard working, sustainable solutions. At each end and everywhere in between, the supply chain of e-commerce must run smoothly – so what happens when it doesn’t?

In 2017 alone, US companies spent an unbelievable $1.5 trillion on shipping and logistics, up 6% from 2016. During this same time, e-commerce sales increased 16% and consumer expectations are only growing. By 2018, eight in ten customers were unlikely to shop again after a poor delivery experience. These days, shoppers expect more than just high-quality goods at low prices; they also demand reliable and predictable shipping options.

This brings us to challenge number one: meeting customer expectations. Though Amazon is a favorite among online shoppers, three out of four consumers would choose a different vendor if there were better shipping options offered, and this isn’t exactly easy. Between 2016 and 2017, businesses saw significant operating cost increases along every step of the supply chain from transportation to warehouse labor to inventory. On top of all that, 90% of customers expect a full refund for late delivery, lest they take their business elsewhere. How is any retailer able to keep up?

The answer is: unfortunately, not very well. Traditional best practices for operational efficiency may have worked in the past, but it leaves out one very important part of the supply chain: customer experience. When loyalty and satisfaction are tied in so tightly to delivery standards, something that is often beyond the control of retailers, this indicates the need for some serious changes. To make this possible, businesses begin to consider systems of intelligence that take into account the entirety of the modern supply chain. It’s systems like Enterprise AI that changes the game.

In a study conducted in 2017, 71% of retailers found that sharing order information, like shipment and delivery data, among all departments was an important and meaningful step for operations. This leads to cost reduction on all fronts in the form of simple predictability. In 2018, trucks containing no inventory at all accounted for 16% of total mileage for just one US company. Yet with algorithm predictions based on past information, delivery routes, distance traveled, and fuel consumed were all reigned in avoiding costs of $400 million a year and reducing CO2 emissions by 100,000 metric tonnes.

Idling equipment and workers, inefficient warehouse standards, excess inventory, and over/underproduction can quickly add up into wasted time and money. The excess inventory costs companies in the US $443 billion each year. Furthermore, when considering new tech options for their business, smart leaders focus on both profit margins and cost reduction. Again, AI steps in to streamline and simplify these issues through predicting market demands and subsequently reduce or increase inventory as necessary.

In the world of e-commerce, there’s more to logistics than just slapping on a shipping label and dropping it off at the post office. As consumers spend more and more time shopping online, the reliability of deliveries becomes the responsibility of retailers. See this infographic for more on how they are meeting expectations with AI.