The future of AI and supply chain logistics can be both exciting and scary
For Matthias Winkenbach, Principal Research Scientist at the MIT Centre for Transportation and Logistics, the impact of AI in supply chain logistics is exciting for the huge potential that it might bear, and scary for the fact that there's simply no way to remain competitive as a company within the logistics and supply chain industry without adopting AI and machine learning.
"AI has a lot of potential to solve very complex real-world problems and to incorporate much more richness in terms of data and information into the decisions that have to be made on a daily basis in pretty much any supply chain system,” says Matthias.
A good illustration of the complexity is in how we design distribution networks. Previously these were designed for a single objective – optimising for profit or for cost. However Matthias explains, “in reality, the true objective function of a company, driver, or warehouse manager is more complex. When designing a distribution network, you want to figure out where should I put my distribution centres? How should I allocate inventory to these facilities? Which customer should I serve from where? Which route should I take to do so? What type of vehicle should I use on which route?”. AI and machine learning is helping to solve these increasingly complex planning and design objectives, and accounting for safety, sustainability, and convenience – other key factors in being able to better optimise supply chains.
Matthias goes on to explain other ways in which AI will impact supply chain logistics, including how AI is a prerequisite for increasingly autonomous systems. Whether it’s a delivery robot, drone, or any autonomous technology used within warehouses – all these tools use AI to help manoeuvre safely within their environments.
But, according to Matthias, AI is not necessarily going to revolutionise the use of robotics and supply chain logistics anymore. And that’s because robotic solutions have already come a long way in this space.
“I think the true revolution that we are probably going to see over the next couple of years comes from the ability of humans to interact with the artificial intelligence” he says. This was a revelation that many people experienced when they first interacted with Chat GPT. For the first time, people could talk to a model in the same way they would talk to a colleague. This is the important distinction between what makes a really good machine learning model, versus being Artificial Intelligence.
While there’s been a lot of hype about different technologies in the past, and AI is being hyped right now, Matthias believes this time is different. “The good thing is that this hype is actually grounded in relatively good evidence because we have seen in a relatively short space of time, how much is already possible with the few really groundbreaking AI models that have been published,” he says. “This time I believe there is actually a lot to expect from AI and machine learning as a potential game changer for the supply chain logistics industry in the future.”
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