AI and Blockchain are Changing the Face of Logistics

You can’t control what you don’t know. For years, this has been one of the global logistics industry’s greatest challenges. In fact, a recent global survey from IBM [1] saw 84% of chief supply chain officers citing a “lack of visibility” as the “biggest challenge” they currently face. This is the hurdle and the opportunity presented by the Fourth Industrial Revolution.

According to founder and executive chairman of the World Economic Forum, Professor Klaus Schwab, the Fourth Industrial Revolution will see a range of emerging technologies fusing the physical, digital and biological worlds, which will have a marked impact on all disciplines, economies and industries [2].

For example, in situations where visibility is hard to come by, blockchain establishes the end-to-end transparency logistics professionals are looking for. “In virtually every industry in which complex logistics, supply chains, or financial transactions depend on immediate action — and in which fraud or safety is paramount—blockchains are creating unbreakable chains of trust,” the IBM report states.

But uptake is slow. According to a 2018 Gartner survey, only 1% of CIOs (across all industries) around the globe have an actual blockchain implementation at their organizations and 8% were experimenting. These numbers may indicate that the technology is still in its infancy but upon closer inspection, the 1% of CIOs who have implemented blockchain are using the technology to do some pretty impressive things and laying the foundations for other businesses to follow their lead.

In Canada, Walmart is currently using blockchain to improve supply chain transparency and track their goods more efficiently [3]. In 2019, the multinational retail corporation launched what they claim to be the ‘world’s largest’ blockchain-based freight-and-payment network. For Walmart, blockchain ensures accuracy because variable information – like transport time inputs, for example – is matched against IoT sensor information and GPS tracking data, which is uploaded to the blockchain ledger in real time. By removing time-consuming and error-prone manual processes they can control logistics more efficiently because the information is available immediately.

In line with this, some logistics businesses are using artificial intelligence (AI) and analytics to up efficiency, minimize disruptions, speed up response times and, ultimately, create better supply chains. 

AI in action
AI streamlines the supply chain process by leveraging historical data to identify and analyze trends. Which is exactly what United Parcel Service (UPS), an American package delivery and supply chain management company, has done.

Did you know that UPS drivers almost never turn left? [4] While it may seem strange for a delivery van to sometimes not take the shortest route, the company has found that turning through oncoming traffic (left in countries where they drive on the right and vice versa) is hugely inefficient and it wastes a lot of petrol. Using advanced algorithms, AI, and machine learning (ML) they’ve been able to optimize journeys across their 66,000 routes and save a lot of petrol in doing so.

And recently, UPS have incorporated dynamic routing into their logistics systems so that drivers and customers are kept informed about any changes to estimated journey times, which are regularly affected by factors like traffic congestion, weather or even new packages entering the collection system. Using AI, delays can be predicted in advance, giving UPS time to get ahead of the disruption. Not only does this boost the business’ bottom line, it also builds customer loyalty and trust.

There is no denying that the future of blockchain and AI in logistics is filled with potential. While supply chain leaders like Walmart and UPS paint a pretty picture of what AI and blockchain can do across the supply chain, these technologies are not for everyone and will also take time until they reach maturity. Gartner, for example, reports that 80% of supply chain blockchain initiatives will remain at a proof of concept (POC) or pilot stage through 2022. [5] 

Nevertheless, from our perspective it’s important for organizations to take a closer look at blockchain and AI, identifying problem statements to test the technology in the field. Only then will experience be gained to make fact-based decisions on future deployment of such technology for use cases. Investments need to be made in a smart manner, clearly identifying key performance indicators defining the success of a POC or pilot, as well as keeping its scope small and manageable. Remember that such projects are a learning opportunity and lay the groundwork for a logistics industry that is more predictive, automated and personalized.

Is your organization already experimenting with AI and blockchain technology? Are you using it to make supply chains more efficient, transparent and improve overall performance?  We are keen to hear your thoughts and experiences thus far!