Artificial Intelligence to transform key sectors

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AI's ability to streamline many supply chain and logistics functions is already delivering a competitive advantage for early adopters.

Artificial Intelligence is becoming an increasingly vital part of logistics and supply chain management and is expected to reshape the industry in the future. However, the adoption of AI requires a massive investment in technology and hiring of experienced AI and IT professionals.

AI industry specialists highlighted that the current interest in the adoption of AI is mainly driven by numerous key factors such as recent breakthroughs in technology, significant investments by major industry players in data, and increasing demand from shippers.

"There's a lot of buzz about AI's role in logistics and supply chain management. It's quite understandable as the combination of AI and logistics are the backbone of businesses seeking a competitive edge and hoping to compete fiercely in the future. We believe, AI can offer a huge benefit to supply chain managers, but only if it is based on solid fundamentals which consider the diverse and dynamic nature of today's modern supply chains," said Shailesh Dash, chairman of Dubai-based Gulf Pinnacle Logistics.

Major logistics providers have long relied on analytics and research teams to analyse the significant amount of data generated from their day-to-day operations. It has been noticed that AI's ability to streamline many supply chain and logistics functions is already delivering a competitive advantage for early adopters by reducing shipping time and turn slashing costs.

A cross-industry study conducted recently by McKinsey on AI adoption found that early adopters with a proactive AI strategy in the transportation and logistics sector enjoyed profit margins greater than 5 per cent.

Dash added: "For many years, technical advances in logistics has lagged behind other industries. I see a lot of benefits of AI to supply chain and logistics operations including reductions in costs, faster deliveries, improved forecasting and improved customer service."

Only 21 per cent of the transportation and logistics firms in the study had moved beyond the initial testing phase to deploy AI solutions at scale or in a core part of their business. The challenges to AI adoption in the field of supply chain and logistics are numerous and require major capital investments and organisational changes to overcome.

"I believe, large-scale players are the early adopters of AI due to the significant investment required in installing new IT systems and breaking down data silos in addition to hiring IT experts to enhance operations," Rodney Viegas, general manager of Dubai-based Abdul Mohsen Shipping, said.

"I don't see any significant reduction in staff immediately after the adoption of AI as companies need to develop frameworks on how workers' roles will change due to AI and automation."

Businesses are making great strides with artificial intelligence, machine human interaction and logistics collaboration. Breakthroughs in AI, robotics and automation will boost the logistics sector. Although manufacturers have had interest in industrial robots for some time, complex logistics operations and high robotics costs formed barriers to adoption. Today costs are going down and robots are more flexible and easier to programme, making them cost-effective in repetitive and physically demanding logistic tasks.