The impact of AI in supply chain logistics #ai #logistics

Thought starters - Ideas about the key trends shaping business

Matthias Winkenbach, principal research scientist at MIT Centre for Transportation and Logistics said: "I would say the future of AI and supply chain logistics can be both exciting and scary. Exciting for the huge potential that it might bare. Scary for the fact that there's, simply no way to remain competitive as a company within the logistics and supply chain industry without adopting AI and machine learning.

I'm Matthias Winkenbach and I'm a Principal Research Scientist at the MIT Centre for Transportation and Logistics. AI has a lot of potential to solve very complex, real world problems and to incorporate much more richness, in terms of data and information, into the decisions that have to be made on a daily basis in pretty much any supply chain system.

One of the main areas of application of AI and machine learning is in solving increasingly complex planning and design objectives. So, while traditionally, for instance, you would design a distribution network or a vehicle route for a single objective, like you optimise for cost or you optimise for profit. In reality, the true objective function of a company or of a driver or of a warehouse manager is more complex than that.

So, think of designing a distribution network, you want to figure out where should I put my distribution centres? How should I allocate inventory to these facilities? Which customer should I serve from where? Which route should I take to do so? What type of vehicle should I use on which route? There are other things that play a role, like safety, like sustainability, like convenience, and that's where AI could come in. Basically, helping human decision makers make sense of data and use analytical methods to solve increasingly challenging problems for increasingly complex logistics systems.

AI is a prerequisite for increasingly autonomous systems, be that a delivery robot or an autonomous delivery drone, be that autonomous technology that's used within the warehouses, for instance. So that these tools basically know how to manoeuvre safely in a certain environment. The way I see it right now, AI is not necessarily going to revolutionise the use of robotics in supply chain logistics anymore and that's because right now, robotics solutions, especially within the four walls have already come a very long way over the last couple of years.

I think the true revolution that we're probably going to see over the next couple of years comes from the ability of humans to interact with the artificial intelligence. Because that’s I think the revelation that a lot of people experienced when they first interacted with chat GBT, it was the first time that they could talk to a model the same way they could talk to a college and that is the distinction between just being a really good machine learning model versus being an artificial intelligence.

This time, I believe there is, actually, a lot to expect from AI and machine learning as a potential game changer for the supply chain logistics industry in the future."
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