Cutting costs with AI: Revolutionize your logistics operations
What if we told you that harnessing the power of artificial intelligence (AI) could be the secret to slashing your shipping and return costs? That’s right, AI isn’t just a buzzword; it’s a transformative force in logistics.
By incorporating AI into your existing processes, or choosing a logistics service that uses AI, you can optimize almost all of your shipping operations. From route planning to demand forecasting, AI provides the tools to streamline processes, cut expenses, and ensure timely deliveries.
We’ve teamed up with Onfleet, a leading last mile delivery platform, to delve into 5 areas where AI-driven logistics can revolutionize your shipping processes, enhance your bottom line, and boost customer satisfaction!
Master route optimization
In today's fast-paced business landscape, efficient route planning is vital for companies reliant on transportation and logistics. Take Amazon's one-day shipping as an example - customers love it, but how is it actually done?
Well, AI is the answer! Machine learning algorithms leverage vast amounts of data and combine this with machine learning techniques to analyze multiple variables in real-time, helping companies like Amazon to automatically send items along optimized routes and meet their next-day delivery deadlines.
And it’s not just Amazon who are making use of this revolutionary software. The global route optimization software industry is taking off globally, with the market size valued at $5.1 billion in 2022 and predicted to grow from $5.83 billion in 2023 to $16.98 billion by 2031!
Khaled Naim, CEO of Onfleet, describes how they use AI to improve customer experience and route efficiency:
"The way Onfleet uses machine learning is to improve our predictive ETAs so we can provide accurate estimates to customers, even if they're far down the list of stops on a driver's route, when they can reliably expect their delivery to arrive based on a multitude of parameters including the industry of that business, the specific driver and their historical service times per stop, specific locations on the driver's route, and everything in between."
With every additional delivery, our models improve in accuracy. This accurate ETA not only improves the customer experience but also improves the efficiency of both the route planning phase as well as by reducing the time it takes for a driver to drop off the item because the recipient is ready and waiting for the driver when they show up so the driver isn't waiting around very long.
It's a win-win, and there are many situations like this where AI creates both a better customer experience (including with faster delivery) and with lower cost deliveries - two elements that many businesses believe are trade-offs but can actually both move in the same direction when done right."
And it isn’t hard to see why. Implementing this game-changing route optimization technology helps you:
- Save money on fuel consumption
Finding the optimal route for all of your deliveries means shorter travel times, which translates to lower fuel costs and ensures maximal cost-effectiveness for each delivery.
Combined with all the repeat purchases you’ll get from your happy customers, these fuel savings can have a significant positive impact on your bottom line.
- Use resources more efficiently
Did you know over 35% of heavy truck miles are driven when the truck is empty? Companies can maximize the productivity of their fleet by making better use of their assets, such as vehicles and drivers.
AI offers valuable insights to minimize downtime and enhance operational efficiency by taking into account variables such as stop orders, vehicle capacities, and delivery windows when designing optimized multi-stop routes. This helps drivers optimize their delivery schedules, ensuring every delivery is made in time.
- Adapt quickly to changing conditions
A major strength of AI-powered route optimization is its ability to adapt to real-time changes, which would otherwise need to be done manually. Whether it's unexpected traffic congestion or sudden weather changes, these algorithms can quickly recalculate routes to minimize disruptions - and aid driver safety too.
Use predictive analytics for demand forecasting
Calculating customer demand can be a long and tedious task, not to mention very difficult to predict. This can potentially lead to companies stocking too much inventory, paying excessive storage costs or understocking. All of this can result in missed sales opportunities. So, how can AI help?
Through analyzing market trends and detecting patterns, AI can provide you with predictive analytics. These predictive analytics include forecasts as to what the demand will be in a given period of time, enabling you to optimize your inventory levels in advance and avoid costly last-minute shipments.
It also comes in handy in recognizing slow-moving items or products that may be affected by seasonal demand fluctuations. These reports allow you to make better informed decisions in regards to order timing and stock volume. A great example of this is Walmart, as their implementation of demand forecasting has resulted in a 30% reduction in overstocked inventory and a notable decrease in running out of stock.
Choose your carriers more strategically
Picking the most suitable carrier for each shipment can be challenging, particularly when you’re weighing up factors like cost and service excellence.
Traditional manual approaches to carrier selection may result in less-than-optimal choices, ultimately leading to higher shipping costs. However, AI technology offers a streamlined solution by leveraging comprehensive data analysis of carrier performance metrics, shipping rates, and delivery schedules. By utilizing AI-driven algorithms, businesses can receive recommendations for the best carrier for each shipment, ensuring competitive rates without compromising on delivery quality.
Adopting AI-powered carrier selection tools helps you secure improved rates, avoid surcharges, and ensure deliveries are made on time; all factors which bring overall shipping expenses down.
Implement more sustainable business practices
When choosing which products to buy, 70% of consumers now consider sustainability more important than they did two years ago. AI can help you meet these higher customer expectations by keeping your business operations more efficient and environmentally friendly.
AI can optimize product design for circularity by suggesting reuse, refurbishment, and recycling opportunities when needed. As mentioned before, software solutions can improve route planning, last-mile deliveries, and return management processes to reduce carbon emissions by transportation vehicles. Demand prediction is another area that can reduce surplus inventory and overproduction by creating more accurate demand forecasts.
Reduce risk
This advanced technology also allows companies to evaluate the long-term cost (and return on investment) of their products. By continuously analyzing market trends, cost fluctuations, and other economic indicators, AI can provide you with real-time insights into potential risks and opportunities. For example, if the cost of importing a key component of a product rises, AI can immediately flag this change, allowing you to assess its long-term impact on revenue and profitability.
AI also helps predict and manage factors like political instability, natural disasters, and trade policy changes, as AI can foresee potential issues and suggest proactive measures. This allows you to create contingency plans, such as finding alternative suppliers or rerouting shipments, reducing the risk of a big impact thanks to unexpected events.
Transform your logistics with the power of AI
Overall, adopting AI-driven logistics solutions is a strategic move that can revolutionize your shipping operations. As seen with companies like Amazon and Walmart, implementing AI can lead to substantial improvements in delivery times, inventory management, sustainability and operational efficiency.
In the fast-paced world of logistics, embracing AI technology is essential for staying competitive, improving profitability, and meeting the evolving expectations of customers and stakeholders. Make sure you don’t miss out!
To learn more about how you can transform your company’s reverse logistics, click here to learn how ReturnQueen works.
Plus, click here to find out how Onfleet can help you optimize your dispatch and effortlessly manage your routes with its powerful last-mile delivery software.