One of the dominant themes of MODEX 2024, a recent trade show focused on material handling and logistics solutions, was how collaborative robots, autonomous vehicles and machine learning-based software can speed up the movement of products through a warehouse or distribution center. In fact, according to the 2024 MHI Annual Industry Report produced by trade organization MHI (which hosted the MODEX show in Atlanta) and consulting firm Deloitte, “Artificial intelligence adoption and interest are at historic levels, with 84% of survey respondents now reporting plans to adopt AI technologies within the next five years.” AI solutions, in all their many flavors, featured prominently in the report as well as throughout the MODEX exhibit halls.
Two of the reasons for AI’s emergence (or reemergence; the core technology itself dates back at least to the 1950s) are directly related to the top two supply chain challenges cited in the report:
1) Price increases from inflation,
2) Talent shortages.
The report is based on a survey of 1,700 supply chain and manufacturing leaders, and focuses on the immediate need of companies to find solutions that are both cost-effective as well as human-centric. “The key question is: How do you bring the technology and the people together?” asked John Paxton, CEO of MHI.
“AI has the potential to create more resilient supply chains and transform the role of human workers in the space—creating a variety of new jobs and improving real-time decision-making and efficiency,” said Paxton. He noted that AI can help supply chain managers make better decisions faster, while using the technology to train workers more effectively and improve their overall skill level.
In fact, the collaboration between AI and workers was the theme of a panel discussion centered on the results of the survey. “There’s a fear that AI and robots are going to replace people,” pointed out Archna Wunsch, head of global strategy and transformation with Cook Medical, a manufacturer of medical devices. “We need to focus on how AI can enhance and improve workers’ jobs, and their company’s ability to serve their customers’ needs.”
Many people today believe that AI is something new, and in part they’re right if by “AI” they’re thinking specifically of generative AI tools, such as ChatGPT, which are aimed mostly at consumers who are intrigued by Google-on-steroids types of answers to their search engine questions. But research into AI has been ongoing for decades, and for almost that long various types of AI have been promoted as “the next big thing,” whether it was expert systems, neural networks, fuzzy logic, speech recognition, virtual reality, or numerous other technologies that were in search of solutions. And in fact those solutions did arrive, although not necessarily advertised as AI.
For instance, everybody today has access to and in fact regularly implements AI-based tools. Search engines (and not just the GenAI types) are AI-based. Smartphones, too, use AI in various ways, the most obvious being the intelligent agent Siri on Apple’s iPhone. And focusing more specifically on supply chain solutions, supply chain planning and forecasting tools are all based on AI technology.
At the MODEX panel discussion, the focus wasn’t so much on the familiar uses of AI technology as it was on new applications of the technology in material handling and logistics situations—in other words, what sorts of supply chain problems are best solved with AI? As Chaneta Sullivan, director of facility development and safety at fast-food retailer Chick-fil-A Supply, observed, “It’s important to know what problem you’re trying to solve with technology. You can spend a lot on solutions, but still not gain any answers if you don’t know what problem you’re trying to solve.”
“And, if you don’t bring your people along on the technology journey, you’re going to fail,” added Wunsch, who emphasized the importance of focusing on how to keep the workforce engaged at every step of the way.
Part of that comes from the ability of AI-based tools to mimic human decision-making. “Solutions with a bilateral exchange that pairs humans and technology together have the best use cases,” explained Randy Bradley, associate professor of supply chain and information systems management at The University of Tennessee. “They allow the workforce to become more flexible and less task-oriented, and they become a decision-support system and not a decision-making mechanism.”
So what kind of uses are AI being put to right now within the supply chain? According to the MHI-Deloitte report, the most frequent area is within logistics, shipping and transportation (34%), followed by supplier selection and due diligence (33%), and inventory management (27%). When asked about their adoption of AI technologies for any type of supply chain task, 27% said they are currently using AI; 58% said they plan to use AI within the next five years; and 15% said they are unlikely to adopt AI any time soon.
In terms of technology adoption in general, the MHI-Deloitte survey indicates that 55% of those polled have increased their supply chain technology investments from last year (although they didn’t indicate by how much). Of the 1,700 respondents, 88% plan to spend over $1 million, and 42% plan to spend over $10 million on supply chain solutions in 2024. According to the survey, this level of spending “indicates that the majority of surveyed businesses recognize the value of investment in a robust and efficient supply chain in ensuring smooth operations, reducing costs and improving customer satisfaction.”
