Artificial intelligence was supposed to usher in a new era of efficiency and cost savings for warehouse and fulfillment operations, but despite its great promise – and high interest among executives – it is failing to deliver.
A recent report from Lucas Systems, which provides AI software for more than 400 warehouses globally, found that 99% of respondents say they face challenges in using AI more effectively even though 89% believe AI can provide a competitive advantage. Ninety percent believe AI will be a key driver in the future of warehouse automation and 89% believe it would improve the customer experience.
So why is effective use of the technology lagging?
“These findings are consistent with what we’re hearing from our customers,” said Ken Ramoutar, Lucas Systems’ chief marketing officer. “There’s a belief that AI is a heavy lift – that it’s difficult to use and risky or expensive. This thinking prevents widespread adoption in the warehouse and the ability to tap AI’s true potential.”
More than 350 executives, directors and warehouse managers in the U.S. and U.K. responded to the survey. Their top reasons for why AI is not being used more effectively ranged from a perception of high costs compared to the benefits; concerns about risks and control of operations decisions; cost and time for training; and a lack of understanding for implementation.
Nearly 90% of respondents said they needed more expertise and information on AI.
Ramoutar said AI-embedded technologies such as voice, dynamic slotting and in-warehouse travel optimization solutions are transformational technologies from which current users are benefiting.
“These technologies have strong adoption today because operators realize their high value, they trust the software and they appreciate how easy they are to use,” he said.
Lucas produced an e-book with the full results of the survey. In it, the company cited the benefits of using AI, including a 75% to 90% increase in productivity, a 65% to 90% increase in accuracy, and a 60% to 90% increase in responsiveness.
Even as executives say AI is not providing the benefits they expect, the group remains optimistic. More than 70% of respondents expect AI to provide a 50% or greater return on investment within the next five years. DC operators expect AI to infiltrate facilities of all sizes, with 80% saying that within five years DCs will be able to maximize the benefits.
Currently, AI is being used to address worker productivity, error reduction, decision-making, material handling equipment management, maintenance and repair operations, and robot and machine management.
Still, there are obstacles, the survey found. Concern that AI would reduce the number of jobs available was cited by 46% of respondents and 45% admitted a lack of understanding on how AI-based software could be used.
Lucas said AI could be implemented in what it called “five fast-start opportunities.” These are:
- Dynamic sorting – resulting in a 10% to 20% increase in labor savings and 20% to 40% increase in throughput.
- Workflow orchestration – resulting in a 5% to 10% increase in accuracy and 20% to 40% increase in throughput.
- Workforce planning – resulting in a 50% savings in overtime costs.
- Performance management – resulting in a 50% reduction in implementation costs.
- Travel optimization – resulting in up to 50% savings in labor costs due to improved picking/sorting.
“DCs are target-rich environments for using AI to optimize performance. When applied in the right places, AI is a distribution center game changer. AI can drive significant operational and customer experience gains. But software providers must continue to make AI easy to implement and use. This is what we expect in our personal lives from smartphones, digital assistants and apps,” Ramoutar said.