Retail Supply Chains Incorporate Automation and Artificial Intelligence

Automation and artificial intelligence are core tenets of Industry 4.0. The technology promises to make the process of bringing products to market more efficient and effective than ever.

We've had robots building products for decades now - in fact, they were the main differentiator between the second and third industrial revolutions. However, now that these robotic machines can be augmented with connected technology such as artificial intelligence, they are capable of feats which once only the purview of flesh and blood humans - such as getting better at the job the longer they perform it and correcting errors and inefficiencies. We're still a long way from entire robot workforces, but we're drawing closer each day.

The retail supply chain industry is no exception. Automation and artificial intelligence are set to transform the way products are brought from manufacturers to retailers and customers.

Automation

1,900 supply chain executives and retail business leaders were surveyed in recent research by IBM. Of those surveyed, 80 percent stated their intention to introduce some form of automation over the next two years. Those same leaders also believe that embracing automation has the potential to boost revenue growth by ten percent each year.

IBM itself considers supply chain planning and in-store operations to be the highest growth area of automation in retail. 49 percent of retail respondents are currently piloting or using automation in their supply chain operations.

One of the main ways automation and artificial intelligence benefits supply chains is by breaking down data silos. This phenomenon refers to separate data streams which could be used to inform and benefit one another, but have no way of interacting. Joining together data from sales, inventory, and shipping, for example, can enable supply chains to communicate with one another and enable faster and more accurate ordering and fulfillment.

"The holy grail is having store-specific assortments," said Chief Operating Officer of Lucky Brand, Michael Relich. "Everyone talks about it. No one has really been able to do it. Leaning on automation for merchandising and fulfillment has helped Lucky reduce inventory overall, fulfill 40% of e-commerce orders from stores and even direct e-commerce fulfillment based on store inventory so that orders ship out from stores that see less foot traffic."

AI and automation can process and align these massive data streams without any input from human operators, making decisions and calculations in a matter of seconds and learning from the data as it goes.

Artificial Intelligence

UK department store retailer House of Fraser has fully embraced automation and AI by introducing 5,000 intelligent robots to its warehousing operations across the UK and Europe. These AI-powered automatons can help pick and load orders with a high degree of accuracy and at a greater speed than humans.

"The collaborative robots help our workers more than double the speed at which orders are processed, allowing workers to fulfill up to 48 orders simultaneously", said Richard Cawston, Logistics Supply Chain Managing Director for XPO, the logistics operators for House of Fraser. "Further, the robots will handle the heavy lifting and moving of inventory, making warehouse operations safer for workers. However, automation and robotics alone are not the complete answer and implementation will be warehouse-specific depending on the needs of each location."

This follows on from the news that Amazon now has over 100,000 robots working in its warehouse operations. The retail giant now has so many robot employees that it's been forced to equip its flesh-and-blood staff with special belts which the androids can detect, enabling them to navigate around the humans.

"AI and automation are typically used to drive efficiencies and lower costs," said Vice President of Strategy and Alliances at IBM Global Consumer Industry, Chris Wong. "AI is helping people make better, faster decisions, and execute them faster as well. These technologies don't just manifest in lower costs, they could actually be revenue drivers. The research showed many retailers and CPG companies thought the revenue potential for intelligent automation would be even higher than the cost savings."

Final Thoughts

Automation and AI are coming for the retail logistics industry and it's great to see all the different ways this amazing technology is being put to work. The future is bright for Industry 4.0 technology. It's going to be fascinating to see where it goes next.

Automation and AI are set to be hot topics at Retail Delivery Connect 2019, taking place in August at The Westin Fort Lauderdale Beach Resort, FL.

Download the agenda today for more information and insights.