By Siddhartha Bal
In today’s complex market structure, businesses are rapidly shifting to e-commerce to maximize sales and expand their customer base. According to a report by the industry body, FICCI and Anarock, the Indian e-commerce industry is expected to reach USD 120 billion by 2026. This has led to increased demand, making it difficult for businesses to fulfill deliveries on time or as swiftly as customers expect. Delays in delivery result not only in poor satisfaction levels but also loss of customers – this is simply unaffordable in a very competitive market.
Recent technological advancements have led to the evolution of tech-savvy consumers, who demand even faster delivery and support. The traditional delivery model – which involves planning routes, estimating fuel costs, and verifying the product and addresses manually – does not suffice. The traditional model fails to analyze traffic patterns, identify viable routes and predict miscommunication. Since everything is done manually, planners are unaware of weather and other route parameters that might lead to accidents or delays. Another major drawback is the lack of real-time tracking of the vehicle. The company is unaware of the driver’s location, which might sometimes result in fraud.
That’s where artificial intelligence (AI) comes in.
To keep pace with the soaring demand for faster deliveries while ensuring the safety of drivers and goods, logistics companies are integrating delivery management systems with AI capabilities. An AI-powered system is an innovative way of enabling faster deliveries in real-time. The system uses GPS technology and machine learning (ML) capabilities to offer the best delivery solutions even before the customer places an order.
According to a McKinsey analysis, AI will usher in a new logistics paradigm by 2030. There are many companies like DunZo, LogiNext, GoBolt, Locus and Pickrr that have started using AI to enable faster, safer and more efficient deliveries to increase customer satisfaction and retain them.
But how does such a system improve delivery management? Based on various parameters like weather, previous delivery records, number of deliveries and inventory, the system predicts the best way to fulfill delivery. These include:
- Route optimization: Using GPS technology, the system identifies the shortest and safest route to the customer’s location. The route is determined after considering factors like traffic, number of stops and vehicle capacity. This enables timely deliveries and increasing revenue.
- ETA: Unlike traditional delivery models, the AI-enabled system provides the estimated time of arrival of products. That way, customers can reschedule the time of delivery as per their availability.
- Inventory/warehouse management: The system enables businesses to keep track of inventory. It tracks every item as it moves through the warehouse, enabling efficiency at every stage of the process.
- Driverless delivery: Such systems have enabled vehicles to manage deliveries automatically without human interference. Driverless delivery is done through self-driving vehicles powered by LIDAR technology. These vehicles run on electricity and reduce transportation costs, ultimately increasing productivity.
- Risk detection/fraud prevention: The system helps businesses detect risks and prevent fraud. While planning the route, the system checks the records to spot anything unusual that might have happened during previous deliveries. This significantly reduces the risk to the driver and the goods.
The other benefits are:
- Anticipatory logistics: Anticipatory logistics involves working on products even before an order is placed. The system uses deep learning and ML to identify the demand for a product, making it easier for the company to keep track of inventory in demand.
- Increases efficiency: The AI analyzes the dimensions of the warehouse to spot the best place to store an item while keeping in consideration its size and other safety measures.
- Operational and fuel costs: When the system gives the driver the shortest and safest route, it reduces wear and tear of the vehicle and saves fuel costs. The company can leverage this in other aspects of its operations.
- Increased productivity: AI can significantly elevate the productivity of a business by providing the best logistics solutions that save time.
- Many sectors are incorporating AI in their operations to ease deliveries. A recent study by MarketsandMarkets suggests that the drone logistics and transportation market is projected to grow from USD 534 million in 2022 to USD 17,881 million by 2030, at a CAGR of 55.1% from 2022 to 2030. Healthcare, for instance, is revolutionizing the transportation of medicines and vaccines through drones. These drones use AI systems to commute from one location to another in the shortest possible time without human intervention. This can be beneficial during situations like floods, landslides and pandemics.
AI streamlining the delivery process is making it easier for companies to focus on other critical areas. As business and e-commerce landscapes get more complex, more companies will incorporate AI in their delivery models. By using AI as a guiding principle, companies are turning driverless delivery into reality to avoid challenges in middle-mile and last-mile delivery processes. This will help businesses to bolster their supply chain game.
Adapting itself to the changing business environment, AI has transformed the dynamics of delivery in healthcare, e-commerce, agriculture and the military. Through driverless and drone delivery, AI facilitated relief operations during the COVID-19 pandemic. In line with government norms, the synergy of AI and delivery management systems enabled doctors to supply medicines and vaccines during the lockdowns.
As we transition into a digital future, AI will undeniably open new avenues for companies to thrive.