Bringing Artificial Intelligence Into The Supply Chain Who And How?

Zuzanna Kosowska-Stamirowska writes how data acquisition and algorithm design need to be defined - or redefined - for the existing market players to make the AI revolution work.

- Zuzanna Kosowska-Stamirowska

The logistics industry is at the brink of an artificial intelligence (AI) revolution. This sounds like a bold statement for an industry which is currently taking its first steps into digitisation, with close to half of air freight still being processed through paper waybills, shipping agents still communicating with carriers by phone and email, data entered into systems by operators with hours or days of delay, and serious operation planning often still being done in a spreadsheet. But the AI revolution is coming to logistics quickly, perhaps much sooner than expected - and if it does not come from within the industry, then it is likely to come from outside.

There are other similarly complex industries, such as the energy market, which also include network-based operations with separated supply and demand, and which are already deep into the AI revolution. So, we should rather ask: why is AI only reaching the logistics industry now? We can hazard the obvious answer: because, up to now, this was a traditional industry, with operation planning tuned to the capacity of human operators, and there was simply not enough external pressure to drive an external AI revolution. Until recently, the large players of the New Economy who might have had a skin in the game, Amazon in “the West”, and Alibaba group in “the East”, relied on more established logistics actors to grow and scale their e-commerce and distribution operations. This resulted in a complicated provider-client relationship between the incumbents and the new players, with little will to enter into direct competition. The lack of appropriate AI methods for the challenges in logistics didn’t help to speed up the process.