Magdalena Jackiewicz
Editorial Expert

6 ways AI-powered location-based services can optimize logistics operations

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Supply chains are becoming increasingly digitally-driven and logistics businesses recognize the need to invest in smart, AI-powered location-based solutions to remain competitive. According to McKinsey, those who have already implemented AI into their supply chain management efforts managed to improve logistics costs by 15%, inventory levels by 35% and service levels by 65%, compared to competitors that stick to traditional solutions.  Location-based service development is increasingly used to optimize business operations across the different parts of supply chains. Such AI-powered services help to increase efficiency and productivity, plan capacity more accurately, track assets, and reduce costs, providing excellent ROI. Let’s take a look at six specific use cases of enhancing business operations with location-based services.

Route optimization for logistics

Delivering 20 packages by a van may seem straightforward, but it’s not. The possible route options are far too many to grasp. How can businesses involved in shipment of goods fulfill multiple orders daily at the lowest possible cost? At a large scale, shipping them without automated business processes would be impossible. Businesses increasingly use AI-powered location based services to analyze the data regarding individual orders (delivery address and time slots), available fleet resources and their proximity to specific addresses, potential constraints (such as the capacity of individual delivery facilities or vehicles) and geodata, to calculate the best possible route options for transit. Uber, for instance, has developed its own routing engine that currently supports millions of rides around the world every day. Global delivery companies, including DHL, also rely on dedicated systems. Currently, for our client Trans.eu, we are working on adding a geodata layer to inform cargo drivers about entryways to warehouses that would further optimize transit times. By optimizing routes, LBS make logistics operations faster and smarter, ensuring timely delivery to the customer. Choosing the best route also helps to cut costs in a number of ways. For instance, it helps to optimize vehicle fuel consumption, since drivers typically take the shortest route, or avoid overwhelming order fulfillment centers, which carries a risk of delaying, damaging or losing parcels, leading to increased costs and decreased customer satisfaction.

Fleet management optimization for logistics

AI-powered location-based services are indispensable for companies that want to optimize their fleet management efforts. Software can be used to track driver’s location and estimate their arrival time at the designated spot, thereby monitoring the travel times. Advanced systems can also take into account the current traffic levels along indicated routes, helping to find alternatives, should there be risks of delayed delivery.

With that data, businesses can understand when and where their vehicle assets will be available for next assignments, helping delivery managers to utilize the vehicles more effectively. Location-based services are also increasingly used for smart dispatching, which allows to efficiently assign a delivery task to the nearest available vehicle on the run and thus increase productivity. This is of particular importance for on-demand apps like Uber, Glovo and many others. What is more, nearly every industry that relies on its own vehicles employs fleet management software to remain on track: from construction, through public transportation, to medical.

Real-time asset tracking for logistics

Managing the supply chain becomes complicated when the scale of reach or the size of the market itself increases. Industrial goods may be moving from manufacturing or assembly sites, to central logistics centers and local dispatch centers. Location-based solutions ease these operations by offering real-time visibility as to the location of specific assets. It also allows companies to provide customers with accurate information regarding their orders and delivery times. Giants like Amazon and FedEx rely on such solutions in their daily operations.

What’s more, geofencing, a location-based technology that focuses on creating virtual boundaries, can be used to prevent asset losses or theft. Companies that ship high-value goods can use beacons to receive alerts when specific vehicles or shipments are moved beyond the designated areas, such as warehouses. That would subsequently prompt relevant monitoring centers to take action.

Holistic planning for logistics

Geolocation services offer a holistic look at supply chains, with access to data necessary to improve decision-making. Supply chains have been heavily disrupted by the pandemic. With location-based solutions, companies can understand the impact of certain events on supply chain operations and make informed decisions regarding route changes, delivery schedules, manufacturing capabilities and others. Port of Rotterdam, for instance, implemented a complex solution that allowed it to better manage traffic inside the port and improved the quality of its services, helping shipping companies save as much as $80,000 every time they dock. Location-based services are also vital to effective inventory management – by providing insights into distributed inventories, managers can reduce overstocking and avoid undersupply issues. Location-based systems contextualize location data that can be used in predictive analytics, as well as to identify supply chain inefficiencies. Port of Rotterdam, for instance, implemented a complex solution.

Efficient last-mile deliveries for logistics

AI can also play a vital role in improving last-mile logistics. In 2021, that specific segment grew by over 24% due to booming e-commerce and home deliveries, fuelled by the pandemic. Here, AI-powered location-based solutions oriented at optimizing routes and scheduling are essential to executing operations efficiently while reducing costs. Flawless and timely delivery of retail orders and on-demand services has a direct impact on customer loyalty and repeat orders. To that end, Tesco will soon be rolling out Whoosh - a one-hour delivery service available in 600 of its stores. Research shows that about 50% of retail consumers will shop elsewhere if delivery times are too long. That’s why last-mile logistics companies use location-based services not only to ensure fast and efficient order delivery, but also to provide order tracking information and notify customers in case of problems with their orders.

Better allocation of resources for logistics

Without location-based services, logistics companies need manpower to track shipments, fleets, and monitor data. As LBS can now automate a large proportion of these tasks, businesses can allocate human resources to other departments, thereby increasing productivity and helping businesses grow.

Optimizing logistics business operations with location-based services

Applications of AI-powered location based services to support logistics operations at any step of the supply chain are many and versatile. With custom solutions, logistics businesses can increase operational efficiency, generate savings and cut fuel consumption. If you have any questions or have an idea for a specific use case that can help your business, contact me at magda@rst.software and I’d be happy to connect you with our logistics software development team for expert advice.

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