How Gen-AI is defining the Logistics and Supply Chain business

Artificial intelligence (AI) is a hot topic in the world of technology, but if you’re in the supply chain industry, AI should be on your mind too. The fact is that the future of AI in logistics will determine many developments in the future and if you’re not prepared to take advantage of these technologies, your logistics operation may get left behind.

As per Verified Market Research report, the AI in logistics and supply chain was about $3,037.98 million in 2022. The predictive analysis also states that it will increase to $64,459.38 million by 2030 (source). As a result, it will reflect a remarkable annual growth rate (CAGR) of 46.50% by the year 2030. 

Let us learn about the numerous applications and integration of Gen-AI in logistics and supply chains, providing insights into how it is transforming the industry.

Keep reading to learn more!

What is generative AI in the supply chain ?

Gen AI, also referred to as generative AI, is a subset of artificial intelligence that creates real-time data, outputs, or provides solutions based on the gathered input. On contrary, conventional AI modules, which rely on predefined patterns, this generation of AI harnesses the power of deep learning algorithms.

To keep it simple, when a prompt is given to GenAI, it is typically trained in such a way that it takes up a large- number of data sets. When the new user gives the data, the application uses the new data, and with the technology, it creates the new content. It can be in the form of text, images, or videos.

Why does AI matter for the logistics industry ?

Today, with modern technologies, most logistics companies are facing issues like shortages of labor, supply chain management in a crisis, and a workforce relying on effective communication that combines with quick decision-making. Generative AI technologies are currently playing a vital role in all of these things.

Taking advantage of AI-driven technologies, businesses are reshaping their logistics operations, inventory handling, and prediction strategies, leading to more efficient and seamless businesses.

But how does that mean for supply chain professionals ?

• Using natural language processing capabilities, GenAI will build more detailed and accurate models than other technologies.
• Utilizing input data, generative AI will fill the gaps in the historical data, allowing logistics to predict major supply chain disruptions.
• It can be used as a simulation and predictive analysis to explore diverse scenarios, test factors, and make confident decisions without taking risks.

7 use cases and applications of Gen AI in supply chain management:

GenAI use cases and applications are used in supply chain firms across various departments to enhance efficiency. Here is a list of some of the use cases of the supply chain:

#1. Inventory Management:

AI enhances supply chain owners to train on data sets such as levels of stocks, warehouse capacity and manufacturing time. Using this data can suggest possible ways to optimize the inventory process including when to reduce or restock. This in turn helps them to minimize the excess storge. Thus, GenAI uses the analyzes to reduce the stock costs while preventing excess storage.

#2. Demand Forecasting and Planning:

AI helps in forecasting demand and load planning by analyzing large volume of data. It includes shipment volumes, destinations and delivery schedules. It aids in allocation of goods or containers in a view of factors like weight limits, route planning, efficiency and delivery destination. It adapts to the real-time changes, helping logistics teams quickly allocate space for new orders. Thus integrating GenAI will dramatically improve demand forecasting, reduce transportation cost, enhance efficiency and improve overall supply chain visibility.

#3. Automated response to cargo theft:

GenAI helps in the prevention of cargo theft by improving incident response times and security in the logistics. Utilizing this shipper can mitigate risks and manage them for potential thefts, which in turn prevent cargo losses. AI-driven solutions are used to navigate the cargo from one point to another. This proactively analyze data's like theft patterns, current location and real-time information using the GPS trackers.

Thus GenAI can provide information for shippers on how to get accurate data and respond to the specific thefts. It also suggest various task like re-routing and notifying authorities.

This GenAI approach minimizes overall production downtime, reduce costs, waste and enhances raw material procurement efficiency.

#4. Raw material sourcing:

AI driven automated solutions can help logistics firms to analyze various factors. Like supplier reliability, fluctuations in pricing, quality standards and geographical data to determine the sources for raw materials. It can quickly help them to look at the current market trends and build a list of approved vendors that can provide a suitable alternative.

#5. Tracking and monitoring shipments:

Timely delivery is one of the important factor achieved when GenAI integrated with a track-and-trace visibility service. They are able to make well-informed decisions, thanks to this automated technology, which can provide track reports on geo-fence entry and readily find shipments. Additionally, you can use AI-powered ETAs to forecast potentially dangerous events.

Thus, integrating GenAI into your supply chain business helps reduce delivery times, improve shipment visibility, increase efficiency, and enhance customer satisfaction. This approach provides the shippers with real-time information, like arrival data, in optimal condition, which results in overall performance.

#6. Predictive analysis:

GenAI coupled with Machine Learning (ML) in supply chain helps to predict the crucial patterns in logistics. It enables the workforce to make well-informed inventory management decisions. It refines in various areas like demand forecasting, preventing the bullwhip effect and optimize the inventory levels through AI-powered predictive analytics.

IKEA, a giant leading company has introduced this AI tool to deliver the accurate predictive insights of new data sources. It allows them to align its inventory and warehouse with market demands much more effectively.

Thus integrating in your business can prevent effective use and imperfect outputs which is also referred to as AI hallucinations. GenAI can run simulations and compile findings into a report for effective use.

#7. Reverse logistics and sustainability:

AI simplifies reverse logistics and returns management by analyzing logistics returns. It helps to determine the best alternative routes for returned goods, deciding how to dispose of them and optimize the inventory allocation.

It plays a major role in promoting sustainability. It can be achieved by optimizing logistics and transportation routes to minimize fuel consumption and transportation cost. Nowadays big companies are using freight automation system to reduce carbon emissions. They have the advanced features to schedule their freight with a flexible window enabling them to access top carriers/goods at competitive rates.

Now, how do you implement GenAI solutions in supply chain and logistics ?

However, how can businesses effectively use generative AI to avoid errors and get the finest results in the shortest amount of time? Follow the steps given below:

1. Define objectives and scope
2. Access data
3. Form a cross-functional team
4. Choose the correct AI technologies and models
5. Integration with existing systems
6. Monitoring and maintenance
7. Scale and optimize
8. Compliance and security

Next steps!

Finally, you have come to an conclusion that GenAI in the supply chain and logistics industries gives us the opportunity to improve efficiency and customer experiences. It helps to automate and optimize route planning, demand forecasting, inventory management, resource utilization, and better customer satisfaction.

Cozentus, a leading 3PL partner specializes in creating AI-driven custom solutions that are best to your business needs. With a proven track record in AI, ML, NLP, cloud computing and other advanced technologies, we empower logistics firms with cutting-edge solutions This in turn the logistics industry is better able to innovate and operate more efficiently in the quickly evolving digital space.

Makeover your supply chain and logistics with our GenAI automation solutions! Click here to learn more about our offerings !