What Is the Potential for Artificial Intelligence for LSPs?
Logistics Service Providers are eager to know how Artificial Intelligence could affect daily operations and automate processes. With the subject of AI top of mind, Descartes invited industry thought leaders, Adrian Gonzalez, President of Adelante SCM, and Nelson Cabral, Director of Customs at DSV as part of Descartes 2023 Innovation Forum to share their thoughts and insight on the topic of AI and its impact on logistics service providers.
“In January 2023, we surveyed members of our Indago supply chain research community, all of whom are professionals in supply chain logistics,” said Adrian Gonzalez of Adelante SCM. “We asked them to assess their understanding of AI, and a significant 32% admitted to having either very limited or low knowledge about how AI could be applied in supply chain management.”
“The results indicate that many companies and professionals in the supply chain and logistics field are still in the learning phase regarding the practical applications of AI. That's why it's essential to have discussions to help educate the market. Many individuals and organizations are eager to learn more about the current state of AI technology and how it can add value to the industry.”
Click here or on the image above to watch a session from Descartes 2023 Innovation Forum, "AI in Logistics Technology - Ally or Adversary".
What Is the Difference Between Artificial Intelligence & Machine Learning?
“Regarding the distinction between AI and machine learning, these terms are often used interchangeably, however, there is indeed a difference,” continued Mr. Gonzalez, “AI, in broad terms, refers to computers' ability to mimic human thought and behavior, enabling them to learn, solve problems, and execute tasks in real-world environments, such as the logistics sector.”
“On the other hand, machine learning is a subset of AI, specifically focusing on how computers learn. Rather than attending school or gaining knowledge through daily experiences like humans, AI computers learn by using algorithms to analyze vast amounts of data, identify patterns, and improve their understanding with more data and training."
"This process makes their data models more refined and enables them to operate more autonomously, taking actions and making decisions. In summary, AI is about computers emulating human-like thinking and actions, while machine learning is the method they use to learn and improve.”
Where Are LSPs Regarding AI Adoption?
“Regarding the impact of AI on the business world, particularly in logistics, it seems that we're only just beginning to explore its potential,” said Nelson Cabral from DSV. “We're essentially at the initial stages, with many logistics service providers merely scratching the surface of AI in internal discussions. The extent to which AI has penetrated boardrooms varies depending on the type of organization.”
“On the service provider side of the industry, AI has found innovators who have been quick to incorporate these technologies into their operations. This has led to numerous internal conversations on how to streamline business processes, eliminate redundancies, and boost efficiency.”
“The integration of AI into the business world, especially in logistics, is still in its infancy. While some LSPs are keen to be early adopters, broader industry adoption and understanding are evolving gradually.”
What Are the Applications of AI in Logistics Technology?
“Software vendors, especially those in the supply chain logistics sector, have been actively involved in AI for many years,” said Adrian Gonzalez, “They are already exploring the addition of AI into their Forwarder Transportation Management Systems (Forwarder TMSs). This is part of their research and development, and it aligns with their product roadmaps.”
“For Logistics Service Providers, common customer questions, such as ‘Where is my ocean shipment?’ can potentially be answered swiftly and efficiently by chatbots. This not only improves customer service but frees up human resources to focus on more complex tasks."
— Adrian Gonzalez, President, Adelante SCM
“Another promising application of AI is in procurement. Retailers are using AI chatbots to negotiate with suppliers, initially in equipment procurement and even extending this approach to transportation rate negotiations. While the details are not fully disclosed, AI could streamline interactions between shippers, freight forwarders, and carriers.”
“Moreover, generative AI is making its way into the user interfaces of supply chain and logistics software applications. Instead of navigating through reports and dashboards, users could engage in conversations with the system. They can ask questions like, 'Which shipments are behind schedule today?' and receive prompt responses which enables more efficient decision-making.”
“Lastly, we might see generative AI utilized for supply chain mapping. Creating visual representations of supply chains has been a complex and labor-intensive task, but with the help of AI and data inputs in purchase orders, shipping notices, and more, generative AI could potentially generate visual supply chain maps".
“Finally, it’s essential to acknowledge that all these advancements in AI and machine learning are only possible because of other critical developments, particularly cloud computing,” said Adrian Gonzalez, “AI requires substantial computing power, and without the capabilities of cloud computing, none of this would be feasible. Additionally, easy access to extensive datasets has played a pivotal role in making AI and machine learning what they are today.”