- Preserving the food supply chain with the help of AI
- AI-powered route optimisation
- Streamlining warehouse operations with automation
The United Nations World Food Programme (UNWFP) estimates that almost 1 billion people worldwide are undernourished. While one might assume that this is because we don’t produce enough food, this couldn’t be further from the truth — one of the main reasons why so many people still go hungry today is actually because a staggering amount of food we produce spoils before it reaches the consumer. According to the United Nations Food and Agriculture Organisation, nearly $1 trillion worth of food is lost or wasted every year worldwide. That’s more than enough food to ensure that no person in the world would ever have to go hungry again. Food waste can be caused by a wide range of factors, but a large portion of it is due to existing inefficiencies in the supply chain, such as the lack of visibility and human error. To address these issues, a growing number of companies in the supply chain industry are embracing automation, not only when it comes to decision making but also material handling.
Artificial intelligence (AI) technology has the ability to analyse vast amounts of information in a short amount of time and provide full traceability of a product’s journey through the supply chain, which enables companies to minimise or even completely eliminate the possibility of error. While a human might misplace a pallet here and there, an automated material handling system will always place it exactly where it was supposed to. Gartner predicts that 75 per cent of companies will adopt some form of intralogistics smart robots in their warehouse operations by 2026. Additionally, more than 75 per cent of commercial supply chain management application vendors will embed advanced analytics, AI, and data science within their applications over the same period.
[Route optimisation] helped us minimise network disruptions by applying advanced analytics to help us route volume around the impacted areas, adjust to volume shifts, and ensure that we provided capacity where it was ultimately needed.
Matthew O’Connor, a UPS spokesperson
Preserving the food supply chain with the help of AI
As the world’s largest cold storage company, which operates 400 facilities in 19 countries of the world, Lineage Logistics is responsible for delivering food to some of the world’s premier restaurants and grocery stores. Part of that responsibility is making sure that the food arrives to its destination cold. To make this possible, the company uses AI to analyse the flow of orders and predict when each order will leave the warehouse, as well as the path it will take and its estimated arrival time. Based on this data, the AI determines the optimal placement of pallets within the warehouse, placing those that won’t be in the warehouse for long closer to the front. On the other hand, those that will stay in the warehouse for a longer period of time are moved further back. According to the company, the implementation of AI-based smart placement has enabled it to increase efficiency by as much as 20 per cent.
With more than a billion pieces sold each month, FP Corporation (FPCO) is the largest manufacturer of food containers in Japan. The company also provides logistics services to supermarkets and other stores engaged in food distribution. For years, FPCO relied on a complex supply chain management (SCM) system to optimise production, distribution, and inventory processes across its entire network of facilities, which now comprises 19 production plants, 20 distribution centres, and three recycling plants. However, to achieve its goal of creating a “sustainable, recycling oriented society”, the company needed to find a way to make the production and sale of recycled products more economically sustainable by reducing the complexity of the processes and eliminating waste. After realising that its existing SCM was not up to the task, the company decided to implement the aspenONE Supply Chain Management developed by Aspen Technology, which enabled it to maximise its margins and maintain perfect balance between supply and demand. The system provides a comprehensive overview of each plant’s latest supply capability, which enables FPCO to proactively manage its supply chain risk and respond to sudden changes in demand or other unforeseen events in real time. Since the new SCM was implemented, the company managed to reduce its carbon emissions by 160,000 metric tons, as well as reduce the amount of waste sent to a landfill by 443,000 metric tons.
AI-powered route optimisation
The number of packages sent every day has increased significantly over the past couple of years, mostly due to a massive growth of e-commerce. This has placed enormous pressure on logistics companies, forcing them to look for innovative ways to ensure that the packages are delivered to customers in a timely manner. One solution that has proven particularly promising in this regard is route optimisation technology, which enables delivery drivers to find the most efficient pickup and delivery routes in a matter of seconds, eliminating the need to use multiple apps, maps, or road signs. For instance, the logistics giant UPS has developed a route optimisation solution called Dynamic On-Road Integrated Optimisation and Navigation (ORION), which uses advanced AI and machine learning algorithms to calculate the shortest route between two locations. To make this calculation, the software takes into account a wide range of factors, including the number of stops the driver has to make, start and commute times, and the number of pick-up windows per location. It also considers special customer requests, such as such as whether the driver is instructed to knock on the door or leave the package with the concierge. According to UPS, ORION can save nearly 13 kilometres per driver, which translates to approximately 160 million kilometres and 38 million litres of fuel per year.
The company recently expanded ORION’s capabilities by adding a dynamic routing feature, which enables the software to automatically recalculate delivery routes based on changing traffic conditions, pickup commitments, and delivery orders. Previously, if a driver received a request for a pickup after they’ve already been assigned a delivery route, they would have to call their supervisor and ask them to add the new pickup to their route. However, with the dynamic routing feature, the software will now automatically add the pickup and reculature the most efficient route. The company claims that the new feature will allow drivers to save an additional 3 to 6.5 kilometres per route. While this may not sound like much, the savings will add up over time, allowing UPS and its drivers to save a staggering amount of gas, time, and energy. While route optimisation technology is primarily used to streamline last mile delivery, that’s not its only possible use case. For example, UPS is also using it to optimise the flow of packages through its facilities. The company has developed an analytics tool that provides a comprehensive overview of the package flow and calculates the most efficient route from point A to point B within the network based on parameters such as the type and size of the package and its final location. “It basically enabled us to create a digital twin of real-time package flow”, explains Matthew O’Connor, a UPS spokesperson. “It helped us minimise network disruptions by applying advanced analytics to help us route volume around the impacted areas, adjust to volume shifts, and ensure that we provided capacity where it was ultimately needed”.
By democratising our smart warehousing solutions, we hope to boost supply chain resilience to withstand further potential supply chain disruptions, and become a key player in supporting the global e-commerce boom.
Dr Ding Hongwei, general manager of Cainiao Technology
Streamlining warehouse operations with automation
The massive increase in the volume of shipments — coupled with growing consumer demands for faster delivery — has also led many logistics companies to consider warehouse automation. Automated warehousing can provide logistics companies with a wide range of benefits, including improved efficiency, optimised use of resources, increased output volume, improved traceability and reliability, improved accuracy, increased productivity and warehouse safety, reduced costs, and better customer experience. With this in mind, it’s no surprise that the use of robotics in warehouses in expected to increase 50 per cent over the next five years, according to the Materials Handling Institute. What’s more, a recent survey conducted by ARC Advisory group reveals that 33 per cent of warehousing operations plan to invest in conveyors and automatic sorting systems, while 49 per cent plan to introduce autonomous mobile robots and autonomous guide vehicles. In fact, according to a recent report published by Business Wire, the global warehouse automation market is predicted to reach $41 billion by 2027. However, at this point in time, warehouse automation is still not that widely spread, with 80 per cent of warehouses today having limited or no automation capabilities, reveals a recent ResearchandMarkets report. About 15 per cent of warehouses are mechanised, while just 5 per cent are fully automated. High costs and long implementation times are mainly to blame for such low figures, with the average cost of sophisticated automation estimated at around $50 million. Depending on the project, it can take anywhere between 9 and 12 months to automate a warehouse.
One of the companies that have invested heavily in warehouse automation is the Chinese logistics company Cainiao, which recently unveiled a fully automated warehouse in Xiasha, Hangzhou. Boasting an impressive storage capacity of up to 30,000 parcels, this state-of-the-art facility utilises AI technology to automatically sort and schedule parcel pick-ups, enabling it to seamlessly manage the complex setup that involves multiple merchants and products. The sophisticated algorithms also enable it to respond to orders in real time, boosting productivity by a whopping 50 per cent. The company also recently opened a smart warehouse in Thailand in partnership with Flash Express. Spreading over 20,000 square metres, the new facility is populated by 100 automatic guided vehicles developed by Cainiao, which have helped warehouse employees reduce the distance travelled by 90 per cent. What’s more, the technology has helped increase sortation and parcel handling accuracy to a staggering 99 per cent. “Besides enhancing the solutions available within the global logistics industry, it’s crucial for us to leverage present opportunities to raise the visibility and value of supply chain strategies and operations. By democratising our smart warehousing solutions, we hope to boost supply chain resilience to withstand further potential supply chain disruptions, and become a key player in supporting the global e-commerce boom”, says Dr Ding Hongwei, general manager of Cainiao Technology.
In closing
The implementation of AI technology in supply chain management has become increasingly important in ensuring efficient operations across the globe. By utilising AI-based smart placement systems, companies can accurately predict order flow and determine the optimal placement of pallets within the warehouse, thus reducing waste and increasing efficiency. Furthermore, AI technology has proven beneficial in enhancing route optimisation for the logistics industry. By leveraging the power of AI to calculate the shortest route between two locations, logistics companies have been able to improve their efficiency and reduce their carbon emissions by millions of metric tons per year. With AI technology becoming more advanced, it is evident that companies that incorporate it into their supply chain management will gain a competitive advantage and reap numerous benefits.
