The Role of Artificial Intelligence in Logistics, Supply Chains

Supply chain disruptions amid the COVID-19 pandemic highlighted  many deficiencies throughout the process that caused many industries to reassess their logistics management procedures, and even to relocate their chains closer to consumer markets, thus creating the nearshoring trend. The use of improved and modern technologies provides an efficient approach to solve such problems and help the logistics industry to develop more effective ways to continue to run global trade.

The use of artificial intelligence (AI) has gained a great deal of relevance in many fields lately and has become a commodity of sorts. Such advances have proven successful in a number of industries, including automotive, banking, marketing and entertainment, with an enormous potential yet to unleash in many others. It is basically the utilization of computer science to perform tasks typically conducted by humans, like engage in decision-making, analyze data, identify patterns, understand situations and languages, among others. Such technology can even spot mistakes before they occur and render different solutions for several contingencies that could potentially arise.

According to a paper by Harvard University, the history of artificial intelligence programs dates to the early 1950s, when a young British polymath analyzed the feasibility of AI under the premise that human beings use information, data and reason to solve problems and engage in decision-making processes.

Since then, humankind has seen an accelerated development in computer science, especially in the later part of the 20th century and the first two decades of the 21st. Such advancements have been applied throughout a series of industries, with extremely positive outcomes. The future looks encouraging these days, with tremendous developments that have been achieved in recent years.

Artificial intelligence still faces many challenges; perhaps the most significant is data structuring and connectivity. Those enterprises capable of overcoming such challenges would become first-movers, which would translate into a very strong competitive advantage, considering the fast pace with which the world moves these days. There are other challenges and bottlenecks, such as high costs and lack of proper talent, that still need to be overcome in order to build stronger platforms and advance with greater momentum.

There are several stages in logistics and supply chain management that require different levels of specialization to properly function, from raw material transportation to final product delivery to consumers, with many complex processes in between. Thus, the use of AI has great potential to optimize processes, routes, inventories, minimize human error, and improve the whole industry globally. Such applications will reduce lead times and the use of middlemen, while helping to identify shortcomings in many areas.

One of the main pillars on which TRAXIÓN was founded is technological innovation. This is precisely what has made TRAXIÓN a much more competitive enterprise. For us, the use of state-of-the-art technologies represents the most significant competitive advantage and the highest barrier to entry in the sector.

Our clients have become increasingly more sophisticated, and demand real-time information, less human error, constant and enhanced communications, and more visibility. To comply with such demands, it is imperative for TRAXIÓN to be one step ahead in technological terms.

TRAXION, as the leading logistics, supply chain and mobility company in Mexico, has been using and implementing different artificial intelligence programs since late 2021. The main goal is to transform the company into a more predictive organization so that it reaches optimal performance on a per unit and per square meter basis.

Among the main benefits are cost reduction, process optimization, better utilization of resources, and replication of  tasks that ultimately improve efficiency and profitability for all our stakeholders and will pave the way toward an improved operating environment, with stronger ESG metrics, financial ratios, client satisfaction and value creation over the long term.

There are many areas in which such AI programs could be applied within the company to achieve better performance and ensure higher quality services. One is route optimization for logistics, mobility of freight, and mobility of people, through which clients know that the fleet dedicated to their services is ideal for their needs, as well as the kilometer volume that they are paying for.

More specifically, TRAXIÓN has implemented artificial intelligence programs in some key and sensitive areas beyond operations. For example, fleet maintenance programs have been improving progressively, as such technology dictates the best spare part utilization and timing of repairs, depending on geography, route, type of unit, and kilometer volume, which has improved the cost and efficiency of such activity.

Moreover, artificial intelligence has played an important role in the human capital efforts of TRAXIÓN, such as employee selection and recruiting. One of the main challenges for the sector is driver retention, since rotation is considerably high across the industry. Our AI programs have helped to identify the best candidates that have potential to develop a sense of belonging – and other attributes, within the company based on several indicators and data obtained from every candidate.

In summary, artificial intelligence has the potential to improve several areas within TRAXIÓN that will ultimately help management to take the company to the next level. The company acknowledges the importance of this technology in the future of the business, and the implications that such evolution implies. The adoption of AI programs has proved to be effective, with tremendous potential for  sustainable, long-term value creation.