The combination of IoT and AI is transforming logistics from a traditional efficiency game into an inter-connected circular discipline that enables smarter forecasting, real-time visibility, sustainability, and regulatory compliance. Andy Maddock, regional managing director at pallet pooling company IPP, discusses this perfect marriage of convenience for the supply chain industry.
The logistics sector has swiped left on partners-for-life – as found in the embrace of AI and IoT. Both capture the zeitgeist, to an extent, and both have been hyped and misunderstood in equal measure. Logistics has always been a circular discipline to get the right product to the right place at the right time at the right price – and then to reverse the process to complete a virtuous circle sustainable low-carbon returns, asset protection, and waste control.
IoT and AI, often described as solutions looking for problems, have now found their purpose, together, to connect and enable the essential forecasting skills necessary for smart circular supply-chains. Greater digital connectivity through AI and IoT means the concept is no longer a business aspiration, but a corporate ‘hygiene factor’ – an everyday expectation.
Technology has systematically reinvented the logistics sector since the 1980s as a tool to deliver competitive advantage through greater efficiency and productivity. Just-in-time delivery, for example, became the means to reduce stockholdings in favour of in-line or in-sequence supply operations – so products are only loaded onto vehicles in precision production lines, working around the clock, when they are required to in stores.
Now, AI and IoT are changing the supply chain sector in new ways, arming suppliers with new datasets and more reliable data to ensure end-to-end visibility. IoT and AI will re-write the rules of supply-chain logistics further by offering real-time data monitoring and predictive analytics to improve efficiency. AI-enabled low-power IoT trackers and sensors provide companies with a better way to manage inventory and shipments.
This is the case especially with high-volume and high-sensitivity shipments, such as pharmaceuticals. Our business is using AI to support skilled members of our team to make smarter decisions. In short, IoT and AI have taken over the heavy lifting started by the process of supply chain automation. They are creating a digital ecosystem where machine learning is enabling greater earning potential in a highly competitive and low-margin sector.
AI has revolutionised supply chain optimisation by enhancing decision-making, improving efficiency, and mitigating risks through data processing and pattern recognition. Machine learning of supply chain processes has enabled AI systems to accurately predict demand, augment inventory levels, and improve logistics performance – all of which are leading to cost savings and increased customer satisfaction.
Specific areas where AI is augmenting supply chains include demand forecasting, where algorithms can better analyse historical sales data, market trends and seasonal patterns to predict future demand with greater accuracy.
This allows businesses to optimise inventory levels, reduce waste and minimise stockouts. Ultimately, this leads to better customer service and increased profitability.
In terms of risk management and early warning signs, AI can help businesses identify and mitigate potential disruptions, such as weather events, political instability, or supplier failures in order to take proactive measures to minimise their impacts on supply chains. Such capabilities can also provide real-time visibility of the entire supply chain, allowing businesses to better track products, monitor inventory levels, and identify potential issues early on.
AI can help optimise fuel consumption and emissions to help businesses achieve their sustainability goals. It can also help businesses identify opportunities to reduce waste and better improve resource efficiency.
But while AI offers the potential for evolution, there are also potential challenges ahead for the sector as the digital supply chain continues to evolve. One concern is the potential for changes in EU legislation, such as the Packaging and Packaging Waste Regulation (PPWR), which could significantly impact how companies manage recyclable materials and sustainable packaging.
Additionally, increasing focus on Environmental, Social and Governance (ESG) compliance requires businesses to demonstrate greater accountability and transparency across their operations – such as through the implementation of a digital product passport. Another potential challenge is the EU Deforestation Regulation (EUDR), which could impose stricter requirements on supply chain traceability to prevent deforestation-related activities.
Adapting to these regulations while maintaining efficiency, reusability and sustainability in supply chain processes will be crucial for companies moving forward. Overall, however, these are bumps in the road that cannot halt the progress of greater connectivity and sustainability – which will arrive with the infinite potential and fuller embrace of technology.
