AI can "eliminate all human touchpoints" in the supply chain. What does that mean?

Analysts and industry insiders say AI could shake up the transportation industry — changing the way supply chains are managed and reducing the number of jobs people do.

According to industry executives, sidewalk robots, self-driving trucks and customer service bots, as well as generative artificial intelligence that can predict disruptions or explain why sales forecasts might be missed, are on the way.

"AI may be able to completely (or almost) eliminate all human touchpoints in the supply chain, including 'back-office' tasks," analysts led by Ravi Shanker at Morgan Stanley said in a research note last month.

"The freight space is on the cusp of a generational shift driven by disruptive technologies, including: Autonomy, electric vehicles, blockchain, and drones. AI is the latest of these potentially transformative technologies – perhaps the most powerful to date," the analyst added.

For example, the bank said it expects hundreds of self-driving trucks to begin operating in the U.S. by 2024, reducing costs per mile by 25 to 30 percent and eventually eliminating the need for drivers altogether (its timeline is "more than three years").

No more empty shelves?

Supply chains are often long and multifaceted: a company may source from manufacturers in different parts of the world, then ship components to a central assembly plant before distributing the goods to customers worldwide.

The production and transportation of goods, which was already a complex process, was interrupted by the Covid-19 pandemic and the Russian-Ukrainian war – which led to shortages of components such as computer chips and changes in freight routes. This complexity means that companies often don't know what's going on with their products from one end of the process to the other.

"That's where AI (and machine learning) comes into play. By anticipating possible problems in a mobile transportation network... Before it happens, AI/machine learning systems can... It is even possible to avoid a disruptive situation altogether," Morgan Stanley's analysts added.

This is a topic raised by analysts at investment firm Jefferies, who have made several predictions about the impact generative AI will have on transportation and logistics. This includes forecasting demand, predicting when trucks will need maintenance, developing optimal transportation routes, and tracking shipments in real time.

"As generative AI is adopted in the truck and logistics sector, the shortage of truck drivers, the polar vortex of interstate trade disruptions, and the lack of infant formula on grocery store shelves will be a distant memory," said analysts led by Stephanie Moore, who wrote in a research note published June 6.

Go mainstream

Generative AI will be a big part of shipping giant Maersk, and its chief technology and information officer, Navneet Kapoor, said how well the company operates.

"Artificial intelligence and machine learning, they've been around for a long time... Over the years, it has evolved from an interesting research project to a more 'real' project within the company... Now, with the advent of generative artificial intelligence... We have a really critical opportunity to bring AI into the mainstream," Kapoor said by phone.

Maersk has been using AI for years and is now "actively seeking" ways to integrate it into its business processes and functions on a larger scale, Kapoor said. One way it has been used is to help customers plan better.

"We are using artificial intelligence to build what we call predictive cargo arrival models to improve the reliability of customer bookings... Reliability is a big issue, even after the pandemic, so they can better plan their supply chains, inventory, and reduce costs down," Kapoor said.

Maersk also wants to use AI recommendation solutions when shipping routes are congested, such as recommending whether goods should be transported by air or stored. And, Kapoor says, the company hopes to use a generative AI known as a large language model — learning how to identify, summarize and generate text and other types of content from large amounts of data — to better understand the sales process.

"You get a complete picture of all the transactions your customers have had with you in the last year, and you can figure out [for example] the root cause of why you might have lost deals in a certain area of the business," Kapoor said.

A double-edged sword

What about potential job losses?

"In my opinion, generative AI is a once-in-a-lifetime disruption that [a] occurs... So in a more traditional environment there will be job losses, but I also believe it will create new jobs, like every previous technological disruption.

One threat pointed out by Morgan Stanley comes from the impact of "high-tech digital entrants" on the industry, with analysts describing a double-edged sword for transportation companies: AI may help them be more efficient, but it may also reduce the need for third-party services — a third-party that organizes packaging, storage, and transportation Maersk, through its Maersk Growth venture capital unit, has invested in AI startups, including self-driving electric truck maker Einride; Pactum, a company that automates sales negotiations; and 7bridges, an artificial intelligence platform that helps companies view inventory and predict delays.

"We see [data startups] as enablers and accelerators for our transformation, but we're also vigilant: we don't want to doze off on this... Data startups can [an] intermediate us and our customers and we need to make sure we stay ahead of the curve, but also learn from them," Kapoor said.

Knowledge assistant

Igor Rikalo, president and chief operating officer of software company o9 Solutions, said that "knowledge assistants" can help solve another problem: over- and under-ordering goods, and the company helps companies centralize and analyze data. This is often the result of a lack of communication between internal teams, with sales departments placing orders separately from supply chain managers, he said.

"It's a suboptimal outcome because sales [teams] may be investing in projects that promote supply chain constraints, so you're wasting money," Rikalo said by phone.

"We want to see a world where each of us will have what we call knowledge assistants, powered by these AIs and these large language models," he added, "capable of gaining insight into why suppliers deliver products less than, for example, the quantity ordered.

Answering these questions often requires input from sales, marketing, supply chain, and procurement teams, but generative AI may be able to examine large data sets to provide answers.

It could also mean that fewer people are needed for integrated business planning teams that oversee long-term goals, revenue projections, and projections for specific products.

"Today's 1,000-person planning function might be reduced to 100 or less," Rikalo says.