Mark Botticelli | Trimble Transportation
On May 11, 1997, IBM’s Deep Blue supercomputer beat chess champion Garry Kasparov under tournament conditions. Nearly 19 years later, DeepMind’s AlphaGo defeated the reigning Go world champion, Lee Sedol. To beat Kasparov, Deep Blue had to essentially compute every mathematical equation of the game. However, a game of Go has more possible moves than there are atoms on Earth, AlphaGo had to actually outthink Sedol, displaying a developed sense of reasoning, strategy and intuition.
The difference between the computer’s victories illustrates how much Artificial Intelligence (AI) has evolved over the past two decades, and reflects an industry focus on machine learning, which is a subset of AI, and deep learning, a subset of machine learning. Together they are leading a revolution in what AI can achieve, and profoundly changing business capabilities. The nature of the logistics industry makes it primed to substantially benefit.
The advances making better business decisions and workflow possible are improved computer processing speeds and power which increase the ability of AI systems to access big data while algorithmic improvements enable more complex uses of AI in applications. Combined they enable AI to go beyond collecting structured data from static sources like databases and spreadsheets to collecting, processing and interpreting unstructured data. As an example, think of the user-generated content that appears on social media and in apps.
Add in IoT, cloud computing, 5G, and the ability to gather vast amounts of data and process it through machine learning and you’ll find that deep learning expands exponentially. In fact, it explodes – and we stand on the threshold of that explosion. Which means now is the time for 3PLs to get onboard with AI, and here’s four compelling reasons why.
First, by definition, the logistics industry is a network. AI is the perfect tool to integrate disparate data gathered across the network and subject it to actionable, statistical analysis.
Second, the technology has matured to the point where it is accessible, affordable and delivers defined results.
Third, those results can be measured in money and time. The ROI will soon reach the point where it is less expensive for businesses to leverage AI than to not. Logistics leaders like UPS and NFI Industries have already succeeded.
Fourth, without it, obsolescence looms. If the past 20 years has proven anything, it’s that technology, including AI, keeps getting better and faster.
In logistics, every business operates under similar constraints: low margins, high volumes, tight deadlines. AI can transform how a company competes by giving it the ability to plan using predictive analysis based on data instead of forecasting; to save time and money by automating manual processes; and by making the customer experience increasingly personalized.
The prime areas where AI can have a big, sustainable impact for 3PLs include the back office, where every day, detail-oriented and often repetitive functions can be streamlined through cognitive automated business processes to save time, reduce costs, increase productivity and accuracy through using a combination of AI and robotic process automation (RPA). RPA bots can access legacy system data, complete web forms and copy data from one system to another. Natural language processing technology can sift through mountains of invoices and documents to extract critical information; RPA bots can then enter that data into your accounting software to create orders, make payments and send confirmation emails, with each step being completely automated.
AI can also assist in interpreting your back office data and aid in predicting outcomes of decisions based on the data. Employees are freed from repetitive, time-consuming tasks and can focus on interpretation and decision-making. The savings can be substantial; as reported in 2018 by DHL and IBM, the cost savings of using AI and RPA for these tasks was 65 percent compared to hiring an offshore FTE. The same report also estimates that while 93 percent of HR employees’ time is spent on repetitive tasks, 65 percent of those tasks can be automated. Contracts, CRM clean-ups, and customs brokerage are other areas where AI can have deep impacts on back-office efficiency, accuracy and costs.
Predictive Logistics represents opportunities for 3PLs at a global level, at the network level, and with specific internal processes. Using historical and real-time data in tandem to make predictions rather than forecasts is a game-changer, allowing both opportunities and threats to be identified with speed and accuracy aided by AI’s ability to parse and understand the unstructured text found in social media. AI can also predict rapid rises in consumer trends, or deliver intelligent route optimization, which UPS’s Orion system does to the tune of approximately 100 million miles per year, while saving 10 million gallons of fuel and reducing carbon dioxide emissions by 100,000 metric tons. UPS estimates just saving one mile per driver per day can save the company up to $50 million a year.
Seeing, Speaking, and Thinking Logistics Operations, aka robots, autonomous vehicles, computer vision systems, and conversational interfaces can identify items, sort them, pick them up, deliver them to a destination, and let you or your customer know when the item has arrived. Then do it all over again. It’s the technology driving the biggest gains and opportunities in Warehouse Management Systems, platooning and last-mile deliveries.
Last, but certainly not least, is the customer experience: AI is driving customer expectations and improving their experience by delivering timely information via voice agents, text and email notifications as well as messages received on smart speakers like Amazon’s Alexa. Customer service bots can handle increasingly complex questions, process automatic refills as well as give delivery notices, all of which keep customers informed, up-to-date and fully stocked. It saves customers time and money and their expectations for this level of automated service are only going to grow.
Getting started is a significant
endeavor, requiring serious commitments of time and resources. Depending on
your business, the first step should be identifying how AI can bring cost
reductions to your current processes, or how it can be used to create new value
Mark Botticelli is Chief Technology Officer, Trimble Transportation. He can be reached at [email protected] or 952-908-6260.
Photo credit: Ruzjo/Shutterstock.com