AI & Robotics: Emergence of the fourth industrial revolution

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In the last few years, the growing deployment of Artificial Intelligence (AI) and robotics in the logistics industry and related sectors has definitely taken the processes and operations to the next level. The increasing usage of analytics and modern technologies in supply chain in the long run will result in spawning an ecosystem where supply chains link themselves with each other enabling seamless flow of information from one end to the other. According to experts, this is the most exciting time for collaboration between technology and industry professionals to leverage and maximise on each other’s strengths.

Ritika Arora Bhola

The digital revolution is redefining various aspects of the logistics industry and related sectors, and the Indian logisticians are finding ways to carve out the more lucrative elements of the value chain by exploiting digital technology or new ‘sharing’ business models, and they don’t have asset-heavy balance sheets or cumbersome existing systems weighing them down.

Customer expectations are increasing greatly. Both individuals and businesses expect to get goods faster, more flexibly, and – in the case of consumers – at low or no delivery cost. Manufacturing is becoming more and more customised, which is good for customers but hard work for the logistics industry. Add it all up and the sector is under acute and growing pressure to deliver a better service at an ever lower cost.

While newest technologies have not only improved the speed and efficiency of the entire supply chain network but have also cut down cost, deferrals and labour work. The Physical Internet promises great things for the sector, coming along with increased standardisation in logistics and supply chain operations. Finance Minister Nirmala Sitharaman in her maiden budget speech had significantly talked about the government’s plan to invest Rs 100 lakh crore in infrastructure over the next five years which will positively impact the logistics and transportation industry both from a business and connectivity perspective. She stressed on the government’s focus on building a ‘Digital India’ and train people about AI, Internet of Things (IoT) and big data which is transforming the supply chain and logistics industry

AI & Robotics Transforming Logistics Scenario

As per the Economic Survey 2017-18, the logistics industry in India is expected to reach $215 billion in 2020, growing at a compound annual growth rate (CAGR) of 10.5 percent. Observing the same, Rubal Jain, Managing Director, Safexpress says, “With a considerable degree of consolidation is in the offing, with larger warehouses, and a more organised setup, fuelled by innovation and digitisation– will help the Indian logistics industry encourage the functional excellence to a large extent, with integration and collaboration. The digital age will be so intertwined with the logistics industry; it will be difficult to separate the two.”

According to Jain, “Artificial intelligence (AI) is another buzzword in the world of logistics which is increasing efficiencies in the areas of predictive demand and network planning. In the near future, it will be used in a significant way to anticipate events and avoid risks. And one can’t talk about AI without robotics which has already made a world so different in warehouses, by locating, tracking, moving and stacking inventory. Future robotics might even be deployed for last-mile delivery, among other things.”

Last year, a pilot project in Canberra, Australia, grabbed eyeballs when Google’s parent company, Alphabet, started its Project Wing to deliver coffee by drones. “There’s more to come, I’m sure. “All in all, exciting times to be in the logistics industry,” feels Jain.

Definitely, Amar More, CEO, Kale Logistics says, AI and Robotics are set to change the entire logistics scenario in India. “Technological advancements have always helped the Indian logistics industry stay competitive in the face of challenges of legacy systems and siloed infrastructure. AI and Robotics are the latest entrants to the fray of technological game changers in the arsenal of the Indian logistics industry. Logistics industry is getting data-driven, and technologies like AI, Blockchain are using data to the full potential to better anticipate events, avoid risks and create solutions,” explains More.

Talking about the intervention of AI in the E-commerce industry and warehousing sector, More says, “With E-commerce growing at a striking rate of more than 50 per cent, this is changing the way the industry is functioning and adopting technology. AI intervention will see a lot scope in last-mile delivery. Warehouses are looking to automate and interconnect the processes within, robotics for packaging and sorting to machine learning for optimal loading of freight containers. Location intelligence, like geo-coding, is used to map and assess active sites that could serve as potential warehouse locations. And in the not-so-distant future, AI and robotics will likely become imperative tools in the supply chain plans of logistics managers in India.”

Vivekanand, Country Manager- India & APAC, GreyOrange couldn’t agree more. The growth of E-commerce, challenges of new consumption patterns and demand scenario as well as new retail models like omni-channel have impacted logistics in an unprecedented way.

According to Vivekanand, “With expectations becoming more rampant over the years, E-commerce businesses have been compelled to upgrade to some degree of automation to stay competitive and provide faster turnaround. For instance, in a warehouse, technologies such as AI and robotics and automation are being deployed to handle millions of parcels shipped every day. These technologies offer a clear cost benefit in terms of faster order fulfilment and delivery to consumers, higher accuracy in order consolidation and reducing returns and holding leaner inventory. Besides, with the implementation of GST, players are looking at larger state-of-the-art warehouses, about five to ten times their current facilities. At present, we are in the phase where ‘primitive godowns’ are being turned into smarter warehouses, fulfilment and distribution centers, and where robotics and AI solutions are being deployed to improve throughput and increase efficiency.”

Saurabh Pathak, Business Head, Cargo Flash InfoTech also feels that AI and robotics are definitely going to change the way logistics is currently handled in India, especially the warehouse handling. “Warehousing, which is one of the most important components of the logistics supply chain, is predominantly labour intensive at the moment primarily due to cost factor. The government of India (GoI) on its part has taken the initiative to have a National strategy for Artificial Intelligence in place, NITI Aayog has recommended investment in centers called CORES for scientific research for AI planning and development,” informs Pathak.

Major AI initiatives undertaken by GoI

In the last few years, the government of India has taken various initiatives to promote digitisation. Whopping investments have also been made by the government as well as private sectors in this domain. Initiatives undertaken by the Indian government in the domain of Artificial Intelligence includes AI Task Force constituted by the Ministry of Commerce and Industry. Most recently, Finance Minister Nirmala Sitharaman stated in her Budget speech that the government will focus on technologies such as AI, IoT, big data, 3D printing, virtual reality and robotics.

“Such initiatives by the government lead the way for industry to follow suit. Private players in various sectors such as logistics, manufacturing and allied industries are harnessing the futuristic technologies such as AI and robotics in their warehouses and other significant areas of the supply chain,” says More. One such success is the deploying of drones (technically considered as flying robots) in Kale Logistics Solutions’ flagship product GALAXY – Air Cargo Management System.

With Physical Internet expected to add $957 billion to India’s GDP by 2035, AI is poised to transform industry sectors by presenting opportunities to complement and supplement human intelligence and enrich the way people live and work. India, being the fastest growing economy with the second largest population in the world, undoubtedly has a significant stake in the AI revolution. According to Vivekanand, “With an aim to recognise AI’s potential to transform economies and the need for India to strategise on its approach, GoI’s last few annual budgets have promoted these technologies with nationwide programs for AI. NITI Aayog’s initiatives to boost R&D, high-level taskforce and International Center for Transformative Artificial Intelligence (ICTAI) are also helping expedite the logistics industry.”

Vivekanand says that another initiative, titled ‘AI for All’ by the government is also aimed at effective implementation of AI initiatives to evolve scalable solutions and build a sustainable ecosystem through centers of excellence. “These technologies will be a foundation for robust digital infrastructure and the government’s vision to place India on a global technology map.  A larger collaboration between India’s private, government, nonprofits as well as educational institutes will be key to harnessing the development of AI and new-age technologies,” remarks Vivekanand.

Potential impact of AI and robotics

Although, at a nascent stage, the potential impact of AI and robotics on the industries and organisations in India is imminent and irrevocable in its latent possibilities. AI possesses the potential to benefit all industries, and most definitely the logistics industry, moving from consumers to enterprises to industries in terms of adoption. Slowly but surely, AI is fast finding its way to the core of every future-ready software; and legacy systems will be no exception.

More predicts that in the near future AI will substantially transform the end-to-end logistics value chain. Utilisng third-generation Port Community Systems (PCS 3.0), ports will enlarge their role by orchestrating physical and information flows inside and outside terminals to enhance the port’s ecosystem and system-wide efficiency. Forward-looking ports will push toward the next horizon, beyond automation, in the coming era. Every player— be it shippers, terminal operators, trucking companies, railway authorities, shippers, logistics companies, freight forwarders or consignees—will be connected to optimise not just the port itself but also its entire ecosystem. “PCS 3.0 will be powered by AI, with optimisation through advanced analytics, and dynamic scheduling,” says More.

The industrial automation market in India is worth $2 billion with verticals such as E-commerce, FMCG, retail and pharmaceuticals, gradually adopting robotics systems to transform their supply chain. While the entry of robotics has been slow in the other industries, over the last few years, their applications have expanded to various verticals such as e-commerce and in new sectors like FMCG and Retail. In the last five years, E-commerce and logistics companies across the globe have seen a massive demand in the lastest technologies, some of them having pioneered adoption of advanced robotics technologies to optimise supply chains to match the dramatic evolution – in terms of volumes and value.

AI is taking an increasingly central role in the logistics industry, especially warehousing. Today, robots programmed with AI are everywhere, from places like Amazon to small distribution centers. “Increasing technological advancements, rapid penetration of automation in warehouses, the fast-growing ecommerce (a whopping $2.3 trillion market today) and need for enhanced quality and reliability in a warehouse are aiding the growth of AI and robotics,” says Vivekanand. In India too, a larger penetration of AI and robotics in warehouses is being witnessed. The Indian warehouse robotics market is projected to grow at a double digit CAGR till 2024. For instance, the AI powered Butler system by GreyOrange is an example which is helping one of the largest FMCG companies in India for better inventory management. The goods-to-person robotics system is now deployed across the world at massive sites in diverse industries like retail, fashion, 3PL, etc. Butler adapts seamlessly to changing inventory profiles, demand patterns and peaks, which helps the customer with complete visibility of stock in hand, movement and better control of inventory.

Emphasising on the impact of AI on the E-commerce sector, Pathak say that the growth of E-commerce in India has had a big impact on the way logistics was conventionally handled in India. Apart from handling huge E-commerce volumes, the logistics companies have stiff competition on service level expectations, which is forcing the private logistics players to switch to robotic enabled warehouses in order to meet client’s expectations and service-level agreements (SLAs). Installation of automated screening, weight and volume scanners and inline automated sorting machines are just the first step in warehouse automation. “We foresee smart warehouses of future to use voice and visual wearable aids like smart glasses for operational activities such as assignment of locations based on historical data, product level TAT in the warehouse, shortest route, proximity to exit, etc. Despite high initial capex, the AI tools and robotics would help organisations to increase profitability by drastically reducing processing time, cost of operations and on the other hand increase overall efficiency and productivity,” says Pathak.

Suiting to needs

As per India’s Economy Survey 2017-18, the Indian logistics market valued at US$160 bn is expected to grow to US$215 bn in the next couple of years. Technological disruption is catalysing change and growth in most industries and the Indian logistics industry too has to buckle up.

More says that futuristic technologies such as AI and robotics have found a way into the warehouses, plans and budgets of LSPs across the country. Robots can now load the trucks or humans with the help of augmented reality glasses for faster picking/loading. The cargo can then announce itself in the truck and the truck identification device can get associated with each of the packages on the truck. Cargo can now be unloaded by robots on the dollies and sent directly to the delivery docks via high-speed scanners. This is just one example of how robotics could dramatically impact logistics operations in the country. AI on the other hand can lead to a multitude of benefits ranging from optimising delivery routes to reduced costs and maximised speeds, to spurring innovation and enhancing productivity across the entire supply chain. With these objectives in mind, Indian businesses can integrate AI within their supply chain logistics to boost their competitive advantage in this rapidly evolving industry.

More further elaborates, “Across the world, customs administrations are posed with significant technological, economic and legal changes which necessitate newer approaches to managing administrations. Moreover, recent industry studies point towards the dramatic impact of Trade Facilitation on international trade – a boost in global trade to the tune of US$ 1 trillion per year – from improvements in border administration globally. Powered by AI, next-generation Cargo Community Systems (CCSs) are increasingly becoming a norm for countries investing in enhancing trade facilitation initiatives.”

Addressing the complexities which come as part and parcel with every new development, Vivekanand points out, “As complexities in the supply chain increases, its functions such as inventory management, inventory storage, replenishment, picking and shipping orders become key to ensure that the right products are available in stock and get to the end consumer on time. While traditional methods and operations fail to deliver the requirements for higher speed, accuracy and efficiency, automation becomes the need of the hour, so that they don’t lose out on their loyal consumer base. However, sporadic adoption of robotics in India continues to be a challenge. The industry and government needs to continuously push for newer technologies, with more capital investments and organisational changes.”

Bottom line Industry experts call India’s logistics industry a sunshine sector and foresee hottest and popular emerging technologies for enhancing real-time business functions and methodologies. With incredible developments happening in all the sectors, the growth is bound to happen. Moreover, with the intervention of AI, robotics and automation boosting operations and processes, India is likely to become a key hub for trade and potential market to invest for foreign players.

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