5 ways small and medium businesses can use AI in transportation and logistics

Logistics and transportation are costly line items for small and medium businesses. Logistics spending can make up a good portion of total supply chain expenditure, and the costs of last-mile transportation are only increasing.

According to the 2024 SMB Growth Monitor Report, artificial intelligence (AI) tools could help SMBs reach their business goals. Businesses that learn how AI helps in the big picture of business operations can ultimately leverage AI in transportation and logistics to great effect.

Supply chain AI: The big picture for AI in transportation and logistics

AI tools aren't really "intelligent" in the same way as a person. Instead, most AI tools are systems for specific functions that improve over time as they are exposed to more data. Most AI tools are underpinned by machine learning (ML) algorithms. These algorithms outline what data AI can use, how it uses this data and how tools interpret outcomes.

Automation is a priority for transportation and logistics companies—AI can help take automation to the next level by deploying predictive analytics. For example, AI tools can take action in response to specific inputs or outputs in much the same way as a schedule- or condition-based automation system. Where these solutions differ is in the ability that AI has to make predictive choices based on available information.

Consider an automated thermostat in a large warehouse. The thermostat is programmed to adjust the temperature at specific times to reduce energy consumption and deliver consistent product quality. At 6 PM every night, regardless of what's happening inside the warehouse, it drops the ambient temperature by 10 degrees and raises it again the next morning.

An AI-enabled tool, on the other hand, combines automation with acquired data. Using Internet of Things (IoT) sensors, the thermostat can determine if workers are still in the building after hours—perhaps preparing a large order or working overtime. If people are detected, the AI tool overrides the automatic process and keeps the temperature stable to ensure employees are comfortable. Once staff leave for the day the temperature is dropped.

Five ways small and medium businesses can leverage AI

The evolving nature of supply chain AI means there is no single set of use cases for AI in transportation and logistics. However, common AI approaches can help companies make the most of intelligent tools.

1. Intelligent route planning

AI can help transportation companies improve route planning intelligently. This starts with simple mapping: Which delivery route offers the shortest distance and lowest fuel costs? It can also extend into more active operations. For example, if a primary route is blocked, AI tools can automatically reroute drivers to minimize lost time. Tools can also provide near real-time feedback about driving habits to help reduce fuel consumption.

Work from the National Research Council of Canada (NRC), the University of Calgary, the City of Calgary, and two major transportation companies demonstrated the efficacy of AI route planning in practice. Equipped with AI, vehicle travel times were cut by 14%, their speed was increased by 13%, and their CO2 emissions were reduced by 4%.

2. Smart warehousing

As noted by a recent report, warehouses are getting more complicated with more SMBs shifting to online ordering models that offer free or reduced-cost delivery. As a result, more products in more locations means more time required for staff to find what they're looking for and get it to where it needs to be. AI can also help enable smart warehousing by creating optimal worker routes, identifying potential hazards and ensuring stock levels can meet current demand.

3. Stock-keeping unit (SKU) health monitoring

There's also a use case for taking AI beyond observation and into action with SKU health monitoring. This supply chain AI use case combines inventory stock monitoring with predictive analytics to determine which products are sold most often and how long it will take to replenish them. Solid SKU monitoring can help businesses keep pace with customer demand.

4. Asset visibility

More technology can also mean more complexity, which can reduce visibility. For example, if SMBs know they have available stock but can't physically track it down, the impacts can range from lost revenue to reduced consumer satisfaction—either of which may lead to customer churn.

AI tools enable near real-time visibility of both physical and digital assets. These can include on-site stock, goods in transit and any connected devices that help manage inventory.

5. Last-mile improvements

AI could help improve last-mile delivery—the final stretch between suppliers and customers. Last-mile performance can be a game changer. When executed well, last-mile efforts can impress buyers and keep them coming back. Done poorly, companies may struggle to capture market share.

AI tools can help companies track last-mile shipments in near real-time and provide continuous updates to customers. Based on historical data, these tools can proactively address potential roadblocks and automatically send email or text updates to buyers about the current status of their orders.

Start with a smart foundation

As artificial intelligence tools evolve, businesses must consider changing infrastructure requirements.

To deliver accurate results, AI tools need access to significant computing power. And to deliver these results at speed, SMBs need resources close at hand. On-premise and cloud-based solutions each offer half of this essential duo. On-premise tools keep data nearby and accessible, but they come with a finite resource cap. Cloud-based solutions provide scalable computing power on demand, but they add distance between data input and analytics output.

5G mobile edge networks can offer advantages of both worlds. By hosting applications at the edge of their networks, SMBs can keep data closer to devices and endpoints. This makes it possible to deploy powerful AI tools and get efficient responses.

With mobile edge computing (MEC), businesses are better equipped to deploy AI tools that deliver actionable results.

Ready to see where AI in transportation and logistics can take your business? Learn more about Verizon transportation and logistics services.

The author of this content is a paid contributor for Verizon.