By: Billy Morris
October 24, 2023
Gartner’s crystal ball
AI’s role will stand so tall
It will never fall
Gartner is a company that provides research and consulting services to companies worldwide. They work in over 90 different countries with over 40 years of business. They have conducted a variety of research studies that have led to the predictions of an increased use of technology within the supply chain industry. Over the next 10 years, Gartner predicts a 92% increase in digital commerce within corporate supply chains worldwide.
There are a variety of different technologies that are expected to impact the supply chain industry in different ways. One example would be the utilization of AI. Companies around the world are becoming more familiar with AI as it continues to grow. Amazon uses AI in its supply chain and many people believe it’s the main reason for their dominance.
Amazon uses AI within its supply chain in a variety of ways. For starters, they use it in transportation and delivery. By using AI, Amazon has been able to cut costs and improve transportation efficacy, as the Amazon Web Services (AWS) offers the fastest possible route for delivery drivers to take. The AI system is also able to factor in weather conditions that may affect the speed of delivery. This eliminates the possibility of delivery drivers taking their own inefficient routes.
Not only that, but AI has been used to reduce wasted products. According to McKinsey & Company, it is estimated that about 3% of grocer’s revenue is lost due to expired products. AWS connects to a company’s enterprise resource planning and produces its own solutions to get rid of products that are about to go expired at an efficient rate. For example, AWS may run a promotion to get rid of a food product before it goes bad. Amazon also has a good reputation for donating food, as this system has been a key factor in the company donating more than 80 million meals to food banks across the U.S and Europe.
Amazon has also implemented an automatic inventory replenishment service using their machine learning technology. The purpose of this is to ensure that the optimal number of products are stocked at the right distribution centers and that delivery speeds are reduced, which became a vital factor in the increase of sales over the past five years. The company believes that if customers can receive their products faster, due to a replenished inventory, consumers will be more inclined to purchase products.
Finally, Amazon uses a smaller segment of AI (machine learning) when forecasting. This machine learning technology gives Amazon the ability to process millions of transactions, allowing for the company to be able to predict how much of a good is needed at a certain time of the year. Amazon is at a great advantage here, as they can stock their warehouses with the correct amount of inventory before a rush hits.
Gartner predicts that most companies will follow in the footsteps of Amazon and begin utilizing machine learning to help with forecasting. According to Gartner, this machine learning technology can interpret certain events and offer decisions to best benefit the company.
Now that we have gone over what AI tools Amazon has already implemented in their supply chain systems, what is to come? Starting in 2012, Amazon began using robotics within their facilities. They are currently testing two-legged robots that can “grasp and lift items.” Amazon says that this robot will be used to shift empty tote boxes, a tedious process.
Amazon has another robotic system that is currently in the works. This one can “detect, select, and handle individuals’ products.” This robot helps transport individual goods within the warehouse before they get packaged. Ultimately, the deployment of robots across the warehouses has created over 700 new job titles. Amazon is allowing for human and robotic labor to work altogether, while remaining consistent to reducing costs and improving efficiency.
In late September of 2023, Amazon claimed they would invest up to $4 billion into AI. These large investments from bigger companies make it nearly impossible for smaller companies to compete independently. With this large investment, Amazon looks to stay in competition with large companies such as Microsoft and Google.
Interpretation of haiku
Gartner performed a multitude of studies to determine how their customer experiences were. They predict that by 2026, there will be a 20-30% reduction in customer support agents within the supply chain industry. Companies across the world are continuously investing in generative AI. In fact, Gartner predicts that by 2026, over 80% of companies in the world will have invested in some sort of generative AI within production environments. As bigger companies such as Amazon continuously invest in AI technology, it will lead to more of the smaller companies being forced to follow in their footsteps.