AI Powered Optimization for Distribution Centers

350 Distribution Centers in the US and UK participated in an independent research study. The findings? 

Most of them use AI in some area of their business, be that in their warehouses or their logistics operations, while over 90% of them want to use AI in their business processes. 

However, no beating around the bush, the key issues noted were cost, complexity, and lack of understanding of how to use AI properly.

Why do distribution centers use AI?

The warehouse automation market has been growing steadily and experts expect it to reach some 30 Billion USD by 2026. The pandemic has helped this growth, as it drives improvements in supply chains, and thus in distribution centers. Growth in eCommerce, expensive and hard-to-find physical labor and increased customer expectations all lead to investments in automation. Good data is also a necessity of AI, and distribution centers are perfect environments for collecting large datasets. 

Research shows that business owners expect a ROI of over 60% in the next five years, while also increasing productivity, accuracy, and responsiveness by up to 90%. 

Certainly however, there is a consensus on the fact that AI is the future as they bring numerous benefits to businesses, such as: 

AI Optimization for Distribution Centers:

  • Lower labor costs;
  • Dynamic Slotting – fully automated and optimized, with lower costs as no in-depth CAD drawing is required;
  • Higher employee satisfaction;
  • Production output;
  • Automatic workflow orchestration;
  • Safety;
  • Management effectiveness and better Performance Management;
  • In-Warehouse Travel Optimization – it is indicated that 30% of labor costs are attributed to time spent navigating a warehouse inefficiently.

A more futuristic implementation of AI in distribution centers and warehouses is wearable technology. Natural language processing enables voice picking. Smart glasses that automatically scan barcodes and other technology that is still in the testing stage will soon be on the scene.

Amazon is a shining example of using AI in some of its distribution centers. 200,000 robots currently operate in the company fulfilment centers, which reportedly lead to an 800% increase in productivity.

Read our in-depth look into the benefits of AI in warehousing here.

Issues with implementing AI:

While many benefits exist, 99% of organizations say they find it difficult to use AI efficiently. On top of that, 80% state that there is a lack of understanding of how to put AI into practice. 

The MHI Annual Industry Report 2020 finds that only 12% of the respondents in the Supply Chain Industry are using AI tech.

The reasons:

  • Perception of high cost to benefit ratio;
  • Issues with Risk and control operation decisions;
  • Time and monetary costs of training;
  • Lack of understanding for implementation. 

Almost 90% of respondents admitted to needing more information on implementation and use. In all responses a recurring theme is seen of lack of information and understanding. 

Cosmos Thrace is there to help in the implementation, integration, and support of AI in the distribution center. But most importantly, we aim to help inform people about the benefits of the technology. Contact us to find out how we can help on your journey to automation or look at our portfolio of services.

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