Though supply chain management has historically been a human-centric industry, there has been a significant spike in interest around artificial intelligence (AI) and machine learning. In fact, the AI in supply chain market is expected to grow at a rate of 45.3 percent over the next several years, reaching $21.8 billion by 2027. [1]
One major factor behind this growth? Labor challenges. Many supply chain and warehouse management leaders are struggling to find talent due to labor shortages. Turnover rates are high, average employee retention rates are low, and younger generations entering the workforce generally choose work other than warehouse jobs.
Managers need solutions that help them keep up with demand and make the most of the talent they do have — that’s where AI and machine learning come into play. The terminology is often used interchangeably, so here’s a quick primer on AI and machine learning so we’re on the same page:
- AI refers to algorithms and technologies designed to simulate the intelligence of a human being.
- Machine learning focuses on a type of AI algorithm that can be taught and can be useful for predicting future scenarios based on patterns in data.
AI replicates neural networks. But, it can’t do what a human can. This makes it a perfect fit for our human augmentation series as it compliments human work, bringing efficiencies and new opportunities to the table. Both AI and machine learning are critical technologies for assisting and scaling the employees that warehouses already have.
These technologies can benefit the supply chain industry in several key ways, including:
- Improving warehouse design
- Meeting the demands of e-commerce
- Increasing worker productivity
- Improving job satisfaction
Given these capabilities, let’s dive into how AI and machine learning are already revolutionizing day-to-day operations in the warehouse.
How AI can increase efficiency
Artificial intelligence is doing amazing things for supply chain management in terms of warehouse productivity. Firstly, supply chain managers can use AI and machine learning technology to lay out the warehouse more strategically. This helps make it easier and faster for employees to get orders together and out the door. By using AI to automate manual portions of warehouse work, managers can increase productivity and efficiency from all angles.
Further, AI can help supply chain managers keep up with the demands of e-commerce. Waveless operation is a real-time operation that determines the next action an employee should take in the warehouse. For instance, a company might start the day with 5,000 orders and get 25,000 more by lunch. It’s impossible for a human to pre-plan that much work, which today’s solutions solve via a rules-based approach. AI and machine learning can improve supply chain operations by offering dynamic, real-time prioritization. They work by emulating and anticipating patterns of behavior to automate rote tasks meant to be done thousands of times a day. Workers can move about the warehouse more efficiently if AI has predetermined where they should go next, which gets goods out of the facility faster.
AI and employee satisfaction
In addition to increasing productivity, AI can also improve worker satisfaction in several ways. Enterprise applications designed for business use tend to forsake user-friendliness and aesthetics for function, but AI offers the best of both worlds. AI gathers data by analyzing how the worker interacts with the app, and uses that information to figure out what they probably want to do next. Also, today’s technology has advanced so much over the years that the enterprise app experience is on par with the consumer applications that workers use in their daily lives. This provides a simpler and more intuitive user experience.
Further, AI improves job satisfaction by helping employees streamline and automate the most time-consuming aspects of their jobs. This trend is very observable in accounting, as we look at examples like managing payables. AI can detect all the patterns that indicate whether a PO should or shouldn’t be paid, completing this task 90 percent faster than an employee could manually. In this case, AI makes the accounting clerks originally responsible for this task happier because it eliminates a strenuous part of their jobs. These same opportunities exist in supply chain, and will both improve productivity and job satisfaction.
What does the future hold for AI?
The aforementioned use-cases are only the beginning, and the future of artificial intelligence and machine learning in the supply chain industry promises to be very exciting. However, many supply chain managers have been hesitant to supplement their existing warehouse management technologies with AI because they believe it’s still prohibitively expensive or too complicated. In fact, just 12 percent of businesses are currently using AI in supply chain management, according to MHI and Deloitte. [2]
Yet compared to where it was ten years ago, the data science community is much larger and these technologies are much more accessible to small and mid-sized supply chain companies. AI can increase worker productivity and efficiency, boost job satisfaction and retention, and even improve customer experiences using its predictive capabilities. Partnering with a global supply chain technology provider like Körber, with years of experience in automation, workforce optimization, and AI, can help your business unlock the benefits of human augmentation.
