Intelligent supply chain: Harnessing the power of IoT and AI for optimal operations

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Understanding the Intelligent Supply Chain: A Brief Overview


The term “Intelligent Supply Chain” or “Smart Supply Chain” generally refers to the integration of advanced technologies into every aspect of the inventory network.This idea posits that the supply chain is no longer a separate component of manufacturing or retail companies. 


Rather, an intelligent supply chain signifies a shift towards process restructuring, representing a deeply interconnected and streamlined ecosystem built on linked networks and data assets. The aim is to facilitate real-time collaboration and boost forecasting, cost management, and decision-making in vital domains such as logistics, distribution, procurement, and restocking.


The Role of IoT in Modern Supply Chain Management


A prime advantage the Internet of Things (IoT) contributes to the supply chain is efficient tracking and monitoring. This part of Industry 4.0 technology allows fleet and warehouse managers to effortlessly trace inventory and shipments. Combining analytics, mobile computing, cloud, and internet networks, IoT enhances transportation and delivery efficiency, averting bottlenecks and shielding the supply chain from potential knock-on effects. Users can also link smart factory operations to the broader supply chain with IoT.


Specifically, IoT employs devices like sensors and GPS to govern delivery routes and automate tasks. IoT gadgets such as Bluetooth Low Energy (BLE) beacons and Radio-Frequency Identification (RFID) sensors have proven helpful for managing the storage conditions of products and raw materials. At the same time, manufacturers can utilize “just-in-time” manufacturing for optimal convenience and plan for unforeseen circumstances as necessary.


Applying AI in Supply Chain: Opportunities and Challenges


Artificial Intelligence (AI) has been creating significant impact in supply chain management, offering tangible advantages such as accurate demand forecasting, effective route planning, live tracking, proactive machinery maintenance, quicker transit times, and lower transportation costs, among others. AI not only aids in constructing a more open and secure logistics network, but it also assists businesses in adapting to shifting regulations.


AI’s collaborative nature is crucial in narrowing the substantial divide between business partners, suppliers, and customers, aiding in streamlining operations. Advanced robots, one of the most conspicuous applications of AI, have greatly improved delivery networks. 


Additionally, AI supports automated quality control and helps reduce the Bullwhip effect, a common issue for smaller manufacturers. A 2019 McKinsey study reported that over 60% of executives saw cost reductions and revenue increases after incorporating AI into their supply chain networks. Research by Markets & Markets estimates that the global market for AI-empowered supply chains will reach $10,110.2 million by 2025.


Despite these benefits, the application of AI in supply chains does encounter hurdles. High setup costs, data privacy issues, a lack of training expertise, ethical concerns, and regulatory complications present challenges. Nevertheless, it’s essential for progressive businesses to adopt strategies aligned with these emerging technologies to ensure long-term sustainability.


Case Studies: Successful Integration of AI and IoT in Supply Chains



A prime illustration of supply chain improvement through IoT automation is evident in Amazon, the e-commerce giant. The firm has enhanced its warehouse operations using IoT devices that scan QR codes to effortlessly identify products. International shipping company, DHL, has achieved constant availability of roller cages and improved efficiency in heating, ventilation, air conditioning, and energy use through IoT solutions.


Companies like Volvo and Nissan have effectively utilized IoT for efficient vehicle shipment tracking and digitized warehouse management. Another striking example is the Danish logistics firm Maersk, which introduced Remote Container Management to prevent cargo damage and adjust transport schedules as needed. AgTech companies such as Aker Technologies are also adopting IoT to reduce crop damage and other detrimental incidents.


Conversely, Echo Global Logistics employs AI for simplified carrier selection, powerful executive dashboards, and comprehensive shipment reporting. Infor, a company with a similar focus, utilizes optimization engines and sophisticated algorithms to produce actionable insights and bolster overall supply chain finance.


Uptake, based in Chicago, uses AI to predict mechanical failures in cargo containers, while Zebra Technologies employs AI-based data analytics for real-time visibility in loading processes and package delivery. Geek+, a global logistics company, leverages Autonomous Mobile Robots (AMRs) for efficient warehouse operations. The collaboration between Rolls Royce and Google to create autonomous ships and UPS’s utilization of AI for enhanced fleet management further highlight the value AI contributes to the supply chain.


Why are AI and IoT Vital for Improving Efficiency and Productivity?



As the global retail environment grapples with the devastating pandemic, widespread labor shortages, and relentless technological advancements, AI and IoT have emerged as practical solutions for beleaguered organizations. 


The use of cutting-edge cognitive computing has led to proactive problem-solving and robust operations. Central to this is AI’s and IoT’s ability to precisely predict risks and patterns, thereby enabling businesses to enhance productivity in meaningful and focused ways. With the rise of e-commerce and remote work, intelligent supply chains promote much-needed collaboration within complex, cross-border delivery networks.


The Future of Supply Chain Management: Predictions, Trends & Concluding Thoughts


The incorporation of AI and IoT in supply chain management foretells remarkable future tendencies. This includes the rise of Supply Chain as a Service (SCaaS), signaling the birth of a new IT sub-sector. 


Furthermore, as intelligent supply chains considerably minimize waste, companies are eagerly anticipating the advent of circular or closed-loop supply chains. These models recycle and reuse resources, diminishing carbon footprints and encouraging more eco-friendly practices. As Dwight Klappich, respected VP Analyst at Gartner, aptly puts it, “Given today’s volatile and disruptive environment, supply chain organizations must become more flexible, and the solution is digitalization.”


Reports suggest that by 2025, over a quarter of supply chain decisions will be made within the Intelligent Edge AI Ecosystem, and more than three-quarters of large enterprises will engage smart robots in managing warehouse tasks. Nonetheless, it’s crucial to note that the application of AI and IoT in supply chain management is still nascent, as implied by Gartner’s 2020 Hype Cycle. This implies that we’re still about a decade away from these technologies reaching their peak of usability and maturity.

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