Artificial Intelligence Thriving the Supply Chain

At the beginning of class, Jose told us that logistic is often associated with “non-adding-value” activities. I was reflecting in what sense can this be changed, and the answer was quite clear: The magic word “Artificial Intelligence”.

AI bears a huge potential, which we still are not exploiting enough, since AI is in a development stage and the current apllication is quite unspectacular.

However, in the future prospect, AI stands to transform the logistics industry into a proactive, predictive, automated and personalized branch. With the help of AI, the logistics industry will shift its operating model from reactive actions to a proactive and predictive paradigm, which will generate better insights at favourable costs in back office, operational and customer-facing activities.

In my opinion especially the decision-making process during the time a product is shipped will be possible and allow us to add value during this process. The following aims to provide an example on that idea:

AI as Decision Support System
The Supply Chain of Fresh Food

fresh-food1

Let’s assume:

  • We deliver oranges from Valencia to Frankfurt
  • Our truck needs 3 days in order to drive more than 1.600 km
  • We have some quality determinants of our product = The shelf life: Influenced by humidity and temperature
  • SUDDENLY our truck ends up in a traffic jam, the delivery has delay!

→ Net present value (NPV) of cargo decreases

→ Threat to deliver rotten products (we may have more rotten products than agreed on in the contract)

Solution: AI as Decision Support System

  • Use of smart devices in the trucks: Sensors which make use of IoT, they constantly measure the quality determinants and report the state. The IoT is providing us with alternatives.
  • Make an investment decision: Search for closer markets OR renegotiate with  existing customer in Frankfurt and provide them a discount of the cargo.

 

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