Today’s customer demands are getting bigger. They want fast fulfillment, 100% order accuracy, and easy reverse logistics — and they want it all for free or at minimal cost. Fail to deliver and you risk impacting customer satisfaction and retention.
It’s easier said than done.
Maintaining precise inventory control, managing complex supply chains, and optimizing warehouse operations is a real challenge. Employing advanced material handling and artificial intelligence warehouse strategies is critical for success.
AI in Warehouse Management: How is it Applied?
Artificial intelligence (AI) is more than just the latest trend. It has practical applications inwarehouse management that can dramatically improve operations. Leveraging real-time data analysis and AI algorithms, warehouse operators can streamline processes that previously required manual oversight. This boosts operational efficiency, productivity, accuracy, and throughput.
Here are a few ways AI is being deployed in modern warehouses:
- Inventory Tracking: Real-time data helps maintain up-to-date information on inventory levels, helping prevent overstocking or stockouts.
- Order Fulfillment: Algorithms optimize the picking, packing, and shipping processes, accelerating delivery times and resulting in improving customer satisfaction.
- Labor Management: Analyzing resource and labor allocation to ensure that ensuring that the right number of workers are in place at the right time.
- Demand Forecasting: Analyzing historical sales data and market trends to predict future demand.
- Computer Vision: Automating inspection with AI-enabled cameras to identify defects and damage
Understanding Current Warehouse Quandaries
As warehouse operations have evolved over time, some key challenges remain. AI is designed to address these challenges, automate manual tasks, and improve decision-making. Here are some of the key challenges that AI and real-time data can help solve.
Overstocking and Stockouts
Overstocking ties up capital you could be using elsewhere more efficiently. At the same time, it impacts your holding costs and increases the odds of dead stock. Conversely, stockouts are profit killers. Not only are you unable to fulfill an order, but you may drive your customer directly to your competitor to get it.
Inefficient Space Utilization
Warehouses and product mixes often evolve. This can create significant inefficiency in layouts and space utilization. Cluttered storage areas, inefficient inventory management, and excessive travel times can all drive up your operational and labor costs. In most warehouses, travel often accounts for up to half of all labor expenses.
Weak Labor Allocation Planning
The biggest budget line item in nearly every warehouse is labor. Human workers generally make up about 65% of total fulfillment costs. When your team is not allocated efficiently, you’re losing money.
Benefits of AI in Warehouse Management
As a warehouse manager or owner, the use of AI in warehouse management systems can help overcome these challenges.
Enhanced Inventory Accuracy through AI-Driven Systems
Traditional methods of inventory tracking in supply chain management are inefficient at best and inaccurate at worst. And, inaccurate inventory levels are a no-win situation. The Institute for Supply Management (ISM) reports that the average warehouse has 91% inventory accuracy while low-performing companies average about 67%.
AI-driven systems can leverage real-time data analytics and automation to monitor stock levels more precisely, eliminating human error. Warehouse management software benefits can include automating reorder points and automatically issuing POs when stock levels fall below levels to meet demand.
Streamlined Order Fulfillment with AI Algorithms
Order fulfillment sounds simple, but it’s actually complex. A lot can go wrong in the pick/pack/ship process and lead to inaccurate orders and inefficiencies that cost you money. AI can optimize picking paths, ensuring optimal routing.
AI can also analyze patterns and recommend more efficient layouts and storage to streamline operations.
Predictive Maintenance for Operational Continuity
Unplanned downtime is another profit killer and costs continue to rise. A 2024 report in FacilitiesDive revealed the average cost of downtime is about $25,000 per hour.
AI can dramatically reduce downtime by monitoring material handling equipment. Data collected from sensors and IoT/IIoT devices can monitor warehouse equipment health and schedule preventative maintenance to avoid costly breakdowns.
Predictive maintenance avoids downtime and helps extend the lifespan of machinery, lowering your costs over time.
Smart Warehousing Infrastructure for Optimal Space Utilization
One of the most valuable assets you have in warehousing is space. Inefficient use of space drives up operating costs, so optimizing what you have is essential if you want an efficient operation.
AI systems can analyze data on storage, warehouse movement, and fulfillment to identify patterns and recommend more efficient layouts to improve space utilization. This can reduce wasted space and improve the flow of goods, accelerating fulfillment and throughput. For example, AI might analyze the movements of goods and uncover that cross docking would be a more efficient strategy.
AI-Powered Robotics for Efficient Material Handling
AI-powered robots and cobots are becoming increasingly deployed in warehouse operations. For example, the market size for palletizing robots alone will be more than $3.8 billion in 2024.
Automated robots, integrated with AI, can perform tasks like sorting, picking, and transporting items with a high degree of accuracy — reducing the reliance on manual labor and error rates. The data gathered during operations can also provide insight into operations to enhance robotic performance and refine operations.
Seamless Integration with IoT for Comprehensive Connectivity
AI and IoT work together to produce real-time insights by collecting and analyzing data from multiple sources, such as:
• Equipment sensors
• RFID inventory tags
• Environment sensors
• AI-enhanced cameras
• Smart shelves and storage systems
AI turns this data into actional insights, such as communicating with HVAC systems to optimize temperature settings for perishable goods or detecting potential hazards where collisions are likely to occur. Connected, smart systems throughout your supply chain management can transform your operation and help you employ warehouse storage best practices.
Deploy Innovative Warehouse and Supply Chain Solutions
Surgere is an industry leader in AI supply chain solutions, providing innovative solutions for warehouse owners and operators to manage their supply chain and operations more effectively. We can provide end-to-end transparency that enhances supply chain visibility starting with inbound and outbound shipping activities like BOL generation, lane assignments, and cross-docking.
During production, tracking systems monitor every key stage for parts and containers, providing real-time, auditable accuracy to quickly identify exceptions. As products and materials move through your warehouse, IoT allows for precise tracking, enabling you to locate items within inches for seamless next-step processing.
Contact Surgere today to see how you can improve warehouse operations.
Frequently Asked Questions — FAQs
How is AI being used in warehouses?
AI is used in warehouses for inventory tracking, order fulfillment optimization, labor management, demand forecasting, automated inspection, and more.
How is AI used in inventory management?
AI enhances inventory accuracy through real-time data analytics, demand forecasting, automating reorder points, and optimizing warehouse efficiency.
How is artificial intelligence used in logistics management?
In logistics, AI optimizes picking paths, recommends efficient layouts, predicts maintenance needs, and integrates with IoT devices for comprehensive supply chain visibility.
