One of the greatest advantages of deploying Artificial Intelligence (AI) applications is the effective cost containments they yield. AI can help businesses be more efficient in several areas.
Inventory levels
In short, consider their effects as customers, distributors, and suppliers go through economic cycles. Disruptions can wreak havoc on inventory levels. In fact, predictive analytics like AI can make stocking levels a concern of the past. With AI, your trading partners can enjoy the continuous improvement (CI) of just-in-time (JIT) supply from manufacturer to end user.
Transportation costs
I worked in the welding and gas distribution industry where transportation expenses were a significant factor. In one project — pre-AI — we evaluated how to reduce rolling return stock on cylinder trucks. We estimated customer cylinder usage before the trucks left in the morning. Despite our best efforts, some trucks returned with 40% unused cylinders. Additionally, the cost of loading, unloading, and carrying these unused cylinders was staggering. Nowadays, vast amounts of data are generated through the use of telemetry systems, vendor-managed inventory (VMI), and order history. With this information, AI can be used to improve the proper frequency and loading quantities of products on trucks. In the welding and gas industry, this includes hard goods, gas cylinders, and bulk cryogenic gas deliveries.
Pricing optimization
As a vice president of sales for a distributorship, one of my chief responsibilities was customer pricing. We reviewed spreadsheets and printouts with each sales manager to determine annual price increases, tackling one territory at a time. Today, interactive AI can sort that data and determine the right price for each customer. Moreover, AI software providers boast that they can increase their distributor customers’ returns 10X to 30X with price optimization programming. Based on the results, we recommend that distributors prioritize implementing pricing optimization software in their ERP system.
Warehouse automation – One of the best ways distributors can realize cost improvement is by improving material handling processes in the warehouse. Above all, Robotic Process Automation (RPA) is already revolutionizing warehouse labor costs and can improve working conditions. Additionally, robotic automation empowers artificial intelligence to enhance warehouse handling processes by utilizing data.
Cost containment
In conclusion, consider implementing AI in your business today. Also, enjoy the cost containments you can achieve in pricing, inventory, transportation, and warehouse operations.
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