Artificial intelligence (AI) has been talked about as the future ‘next big thing’ in supply chain technology development for many years.
Now, though, there are increasing signs that the future is starting to arrive, with a growing number of logistics providers in Asia and worldwide recently announcing significant AI-related innovations.
The previously generally slow spread of AI across international supply chain operations was highlighted in a discussion paper, Artificial Intelligence: The Next Digital Frontier, published in mid-2017 by McKinsey Global Institute, the business and economics research arm of global management consultancy firm McKinsey & Company.
According to that paper, a cross-industry survey of over 3,000 companies in 10 countries across Europe, North America and Asia had revealed that only just over 20% of transportation and logistics firms questioned had at that point “adopted one or more AI technologies at scale or in a core part of their business.”
However, this year has seen indications that implementation of AI technology across supply chain operations in Asia and worldwide is starting to gain real traction.
In Asia, for example, Yojee, a Singaporean logistics company listed on the Australian Stock Exchange which is currently developing a delivery network across the Asia Pacific region using AI and blockchain technology, has over the last seven months alone reported new service and/or collaboration agreements with major global logistics providers UPS and DB Schenker and Singapore-based Riverwood.
Elsewhere in the world, one of the latest in a series of AI-related developments this year saw prominent Dutch logistics service provider Jan de Rijk announce last month that it was implementing software from Transmetrics, a Bulgaria-based international supplier of AI predictive optimization solutions, to “optimize its assets strategy and reach higher levels of operational efficiency.”
“By implementing the Transmetrics’ product we hope to get a very detailed prediction of the demand for our transport fleet, which will allow us to reposition our assets to where they are most needed, cut the number of kilometres driven and maximize the use of drivers’ time,” explained Juma Al Maskari, Jan de Rijk sales and business development executive. “We also hope to be able to know in advance how much extra capacity we need to book through the use of third-party fleets in times of need, in order to meet the peak demand.”
Some of the background to the current increasing implementation of AI in supply chain operations around the world was outlined by Matthias Heutger, senior vice president, global head of innovation and commercial development, at worldwide logistics service group DHL.
“Today’s current technology, business and societal conditions favour a paradigm shift to proactive and predictive logistics operations more than any previous time in history,” he said in a statement accompanying the publication earlier this year of a joint report by that company and global information technology provider IBM on Artificial Intelligence in Logistics.
Expanding on that point, the report, which defined AI as “human intelligence exhibited by machines; systems that approximate, mimic, replicate, automate and eventually improve on human thinking,” suggested that “there are many reasons to believe that now is the best time for the logistics industry to embrace AI.”
“Never before has this maturing technology been so accessible and affordable. This has already made narrow forms of AI ubiquitous in the consumer realm; the enterprise and industrial sectors are soon to follow,” it argued.
“In logistics, the network-based nature of the industry provides a natural framework for implementing and scaling AI, amplifying the human components of highly organized global supply chains. Furthermore, companies deciding not to adopt AI run the risk of obsolescence in the long term, as competitors seize and effectively use AI in their business today.”
Similar comments about the apparent imminent acceleration of AI implementation across supply chain operations appeared in a report published earlier this year by BI Intelligence, the research arm of Business Insider, a US-based business news site with international editions in Australia, India, Malaysia, Indonesia, Singapore, China and the UK.
That report, ‘AI in Supply Chain and Logistics,’ explained that major logistics providers had long relied on analytics and research teams to make sense of the data they generated from their operations.
However, with the growth in data volumes and the insights which could be gleaned from it becoming increasingly varied and granular, suggested the report, those companies were starting to turn to AI computing techniques such as machine learning, deep learning and natural language processing to streamline and automate various processes.
“The current interest in, and early adoption of, AI systems is being driven by several key factors, including increased demands from shippers, recent technological breakthroughs and significant investments in data visibility by the industry’s largest players,” it stated.
The apparent acceleration in the adoption of AI across logistics and supply chain operations is being further boosted by an increase in global investment and funding for AI in general. On that point, the DHL/IBM report noted that “other contributing factors to the recent surge in progress and interest in AI are the precipitous spikes in venture capital investment in AI start-ups and corporate funding for AI R&D and acquisitions.” In 2017 alone, it continued, a group of 100 AI start-ups had raised US$11.7 billion in aggregated funding across 367 deals, “contributing to a six-fold increase in investment since 2011.”
“While current development of AI-based systems is centred primarily in the US and secondarily China, the growth of AI is a truly global phenomenon,” it added.
However, according to recent industry reports, logistics providers still face a number of significant challenges when it comes to successfully implementing AI technology for day-to-day supply chain operations.
Some of those issues were highlighted in the BI Intelligence report. “Legacy players face many substantial obstacles to deploying and reaping the benefits of AI systems, though, including data accessibility and workforce challenges,” it warned.
“AI adoption in the logistics industry is strongly skewed toward the biggest players, because overcoming these major challenges requires costly investments in updating IT systems and breaking down data silos, as well as hiring expensive teams of data scientists.”
Meanwhile, the DHL/IBM report suggested one of the key issues when it came to wider adoption of AI was that individuals did not trust it, “largely thanks to the hype generated by the media and marketing messages from vendors of AI solutions.”
“More practical fears about AI relate to its potential to improve and thus deepen the impact of automation. As AI develops, it will begin to take over functions that today require human intelligence,” it suggested.
“There is however a twist. AI will also greatly amplify the performance of individuals in their workplace. Human capital experts believe only 9% of jobs will be fully replaced by AI; the remaining majority of jobs will achieve a leap in productivity and output as AI becomes prevalent in the workplace.”
By Phil Hastings
Correspondent | London