eCommerce is becoming more difficult to manage as a small business. The retail giants seem to have the market cornered on everything, from supply-side logistics to consumer demand. It’s more costly than ever to compete.
Customers expect fast, free shipping, and even one delivery blunder could ruin your business. Can artificial intelligence save your business from an unsustainable supply chain?
Inefficiencies Exist Throughout The Supply Chain
Every instance of inefficiency throughout the supply chain translates to higher cost. This eventually renders the entire supply chain too costly to last. Competing in today’s brutal retail market, where customers expect free two-day shipping and for products to be in stock always, is difficult. Oftentimes, it’s impossible to practice.
As small eCommerce retailers, there’s a lack of control of costs outside of your own business. When manufacturers produce things at suboptimal times, costs such as employee overtime or even electricity bills could be thrown way out of balance. And those additional costs get passed down the line.
Once a retailer sends out items for delivery, inefficiencies in the delivery route and even poorly planned truck maintenance can make for late deliveries.
Within a retailer’s control are factors such as:
- Inventory Control
- Employee Scheduling
- Order Picking Efficiency
- Shipping Options
See Also: How Artificial Intelligence Will Dominate the Future of E-commerce
AI Can Address Many Inefficiencies Throughout The Supply Chain
When suppliers and shippers address inefficiencies throughout the supply chain, retailers and customers win. On the supply side, artificial intelligence can accurately forecast production needs so that employees can work efficiently and effectively. Production can be done in a manner that optimizes resources such as electricity and raw materials.
On the delivery side of the supply chain, AI is helpful in a number of different ways. First, AI can predict when equipment such as delivery trucks may break down. It can also schedule routine maintenance before a truck full of deliveries is stranded on the side of the road. Second, AI has been used to optimize delivery routes, cutting down both delivery time and fuel use.
For retailers, artificial intelligence can be used to streamline order picking routes in a warehouse, forecast scheduling needs, and even manage inventory. Inventory control is one of the most crucial aspects of eCommerce, yet many retailers are still relying on the old analog way of doing things.
Artificial intelligence can be used to track orders, track inventory on hand, and forecast the optimal time to reorder certain products based on sales forecasts and inventory on hand. Excess inventory in stock can be a serious problem for retailers — it’s basically money sitting in a warehouse going to waste.
Knowing exactly when to order more inventory, and not a moment before helps retailers to make the most of their capital and cut costs associated with excess merchandise on hand. It also ensures that customers get what they want, when they want it, without having to wait.
Real Life Applications Of AI
UPS used its Orion AI algorithm to streamline delivery routes. Delivery drivers had known for years that making left-hand turns was a waste of time and fuel and Orion was able to prove that.
This AI application continues to improve the UPS delivery process, saving more time and money as new inefficiencies are pinpointed. To date, Orion has saved UPS $400 million in fuel costs per year, as well as 100,000 metric tons of CO2 emissions every year.
Boise, meanwhile, used artificial intelligence to target inefficiencies in inventory and production. The targeted goal was to reduce excess by 10%. The algorithm ended up doubling that target in the first year it was implemented while also increasing on-time deliveries.
Streamlined Supply Chains Are Necessary To Compete
It’s no longer enough to simply have an online storefront — customers have more online retail options than ever before. It’s crucial to both cut costs throughout your supply chain by working with suppliers and shippers that pinpoint and optimize inefficiencies while also targeting your own inefficiencies.
Artificial intelligence is the key to a streamlined and optimized supply chain. Learn more about AI and the supply chain from the infographic below!
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Author: Brian Wallace
Brian Wallace is the Founder and President of NowSourcing, an industry leading infographic design agency based in Louisville, KY and Cincinnati, OH which works with companies that range from startups to Fortune 500s. Brian also runs #LinkedInLocal events nationwide, and hosts the Next Action Podcast. Brian has been named a Google Small Business Advisor for 2016-present and joined the SXSW Advisory Board in 2019.
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