Thursday, July 25, 2024
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Role of Artificial Intelligence in Logistics

Artificial Intelligence is changing the world at a lightning speed. Only a decade ago, in 2012, the AI was realized as a major technology with over 2500 AI applications around the world. Now, the industry has burgeoned to become a market worth $ 136 billion!

This market can further be sub-divided into different sectors, all of which are being transformed by AI rapidly. In transportation and logistics specifically, the market shares investments worth over $2.3 billion, which is as much as 10% of the entire industry. Evidently, logistics is one of the industries that are being completely revolutionized by AI, but how? In this post we’ll talk about the different use cases of AI in logistics & transportation and their benefits.

Top Ways AI is Transforming Logistics Sector

When we talk about application of artificial intelligence in logistics, many use cases take the forefront that use optimization and automation capabilities of the technology. There are indeed many ways AI development services are being used by businesses for their logistics operations, but they vary from businesses to business. So, let’s quickly learn about all of them through following three major AI-based logistics applications.

Demand Forecasting

Demand Forecasting

One of the major challenges logistics industries has faced since the beginning is the imbalance between demand and supply. Never before AI, companies had any means to meet the perfect balance between the two. But thanks to artificial intelligence in logistics, things are changing. Companies can now use data to predict which product will have high demand and which low with an incredible accuracy.

They can now prevent cases of stockout helping brand become more reliable for customers. On one hand availability will work on improving customer loyalty, on the other it will help businesses save on the transportation of the goods, since no repeat trips would be required to meet up the customer demands. This will also help businesses reduce excessive and unnecessary holding expenses at their various outlets.

Demand forecasting also helps in preventing wastage through overstocking. The companies can know in advance the demand for a certain product in different locations. Therefore, no retail outlet will face the issue of redundant inventory. While this is beneficial for businesses of all kinds, it is especially helpful for businesses dealing in FMCG products, that often come with a specific shelf-life. There waste can lead to not just overhead transportation expenses, but waste of products themselves, affecting the net revenues of a company adversely.

Assets’ Optimization

Assets’ Optimization

The AI’s capability of predicting with accuracy is not only helpful in forecasting the demand but also the maintenance needs of the various equipment. Predictive maintenance is leading to huge cost savings to many of the industries and logistics is not an exception. Companies can know in advance which of the transportation vehicles require maintenance or repair even before any symptom of damage become apparent.

Every equipment can be monitored round the clock to raise alerts as soon as any changes are detected in their functioning. This method is better than reactive maintenance, which often mean replacement of parts and long downtimes, and recurrent maintenance, which creates unnecessary maintenance expenses for equipment that may not need it at the given time.

Other than predictive analytics, AI-based automation is also helping logistics businesses in optimizing their investments in the functional assets. The automated warehouse robot application is one such example. The market of robotics in logistics operations has already become worth $4.7 billion in 2021. These smart robots are helping businesses in automating various processes, deprecating equipment that require manual instructions. Such tools can now be replaced with more effective and efficient smart robots that improve accuracy and productivity of every process they become involved.

Procedural Automation

Procedural Automation

While asset optimization and demand forecasting are reaping huge benefits for the logistics sector, their contribution remains neoteric compared to the benefits of operational efficiency brought in by AI in logistics. Logistics software development services are largely used today to leverage the efficiency effect of artificial intelligence. One such major application is route optimization. Companies waste their fortune by missing out on shorter routes in their supply and delivery processes. Usually, the existing routes on record are used by companies, with them having no means to know and ascertain the distance of other routes available.

Furthermore, the cases of avoidable delays were also quite high before implementation of artificial intelligence in logistics. The drivers would only get to know about traffic jams and other hurdles only after they come face to face with them. And even after that they had no means of knowing which alternate route to take. This is largely solved by AI that provides drivers with real-time information to avoid delays and reach their respective destinations in the shortest time.

Other than route optimization, AI is also helpful in improving the efficiency in the back-office operations. The manual tasks in logistics sector are no fewer than the ones in any other. In fact, the sheer volume of transactions in the industry makes maintenance and reporting tasks umpteen and tedious. The AI is rapidly changing the scenario by automating many of these tasks, that too, with improved accuracy. Custom AI-based logistics software can eliminate paperwork by organizing data from various sources automatically. Even for suppliers and retailers with no such advanced tools, transactions can still become more managed through AI tools that extract crucial data points from invoices and then digitize the same in real time. The same application can be implemented to other document processing tasks as well for improved results.

Benefits Of AI In Logistics

So far, we’ve learnt the different ways, applications, and use cases of AI in logistics. And while their respective benefits are quite apparent, let’s see how they are benefitting the logistics industry.

  • Improved inventory management: Both asset optimization through automation and demand forecasting lead the matchless enhancements in the asset management processes. The demand forecasts help in ascertaining there is exactly the right amount of inventory in all the outlets and warehouses of a businesses, at any given time. On the other hand, automation of assets maintenance leads to less damage to the inventory and a more accurate details in the digitized records.
  • Better timings: With route optimization companies can deliver products in a much timelier fashion. Furthermore, the demand forecast can help them in ascertaining there are ample inventory in the nearest warehouse, so the trips to manufacturers can be decreased. All this leads to improved timings in delivery, helping businesses earn consumer trust and brand loyalty.
  • Reduction in operational costs: Businesses are saving huge amounts of money, 60% to be exact, by investing in custom AI-based logistics software development services. AI applications in predictive analytics are saving expenses in unnecessary repairs and downtimes, while automation of various tasks leads to cost-savings through the elimination of more expensive manual work.
  • Improved customer services: Through AI applications like chatbots and improved record organization, customers can have round the clock access to the required information from the brand. Applications in route optimization also helps in calculating more accurate ETAs for delivery which again helps build trust with customers earning loyalty in the most cost-effective manner.
  • Enhanced productivity: Automation of tasks, including route optimization, optimized robotic packaging, quicker offload and onload of deliveries, and back-office processes help companies achieve maximum operational efficiency. This means they can scale their operations for increased outputs with no additional expenses.
  • Enhanced labor safety: While some may argue that AI is stealing jobs in the logistics industry, that is far from the truth. AI is only making the jobs more advanced and less tedious. The automation of tasks like record managements, and onloading and offloading of delivery may have taken up some jobs, but it has created jobs in monitoring and maintaining these tasks from a remote and safer location. Tasks that have potential to injure a human resource are replaced by automated robots making workplace safer for all.
  • Optimized transport network: This is a more advanced application of AI, which is still in its conceptual stage. Route optimization can help different logistics businesses in avoiding unnecessary delays. When this application is scaled to global level, it can help establish better routes for every business. This requires networking of a whole new level and a spirit of cooperation between businesses. If effectively implemented, warehouses and other supply chain elements can be placed optimally to further improve delivery timeline and resource optimization.


Artificial Intelligence is here to stay in the logistics industry. The AI-based applications are already benefitting the industry in a huge way and the futuristic solutions hold even more potential. While there is always a fear of loss of jobs, one need to understand that jobs are not disappearing, rather they are being replaced by more interesting and safer roles. Other than that automation will help companies achieve greater productivity and analytical tools will help them attain optimal cost savings. This means logistics businesses can reach their goals more efficiently and benefit everyone associated with them.

AI is an amazing technology, one that can transform how enterprise solutions look for logistics businesses. A business-wide implementation of AI with application that support holistic monitoring of complete processes will make logistics businesses more profitable and the end consumers more satisfied. All in all, AI-based systems have a huge potential to transform the logistics industry even more. And if you want to stay ahead of this revolution to gain competitive advantage, now is the perfect time to find your logistics software development company and discuss your AI opportunities right away.

IEMLabs is an ISO 27001:2013 and ISO 9001:2015 certified company, we are also a proud member of EC Council, NASSCOM, Data Security Council of India (DSCI), Indian Chamber of Commerce (ICC), U.S. Chamber of Commerce, and Confederation of Indian Industry (CII). The company was established in 2016 with a vision in mind to provide Cyber Security to the digital world and make them Hack Proof. The question is why are we suddenly talking about Cyber Security and all this stuff? With the development of technology, more and more companies are shifting their business to Digital World which is resulting in the increase in Cyber Crimes.


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