supply chain

How Chatbots Are an Asset to Logistics and Supply Chain Management

The greatest test of artificial intelligence is its ability to behave like a human. That was the criteria for evaluating artificial intelligence proposed by Alan Turing in the 1950s.

The Turing Test, as it’s known, is still in use today, and it’s had a big impact on digital marketing. Chatbot-driven campaigns are becoming very sophisticated, and this trend is set to continue.

If chatbots are to communicate with your clients, you want positive engagement. You want to build a good relationship. You want them to be as human as possible.

When you start using chatbots for other types of communication, like those relating to logistics and supply chains, different rules apply because the purpose of the communication is different. With logistics and supply chain management, we’re interested in things like speed and efficiency. In this article, we’ll argue that the ability to impersonate a human is less important in this area.

Logistics and supply chain management is a field just beginning to discover how implementing chatbots can be a major asset.

The Rise of the Chatbots

We’re all familiar with the chatbots that help us to do things online. They’re playing an increasing role in the customer experience. For companies looking to improve their conversion rate optimization, chatbots have become one of the top solutions. They help companies respond to customer inquiries, often instantly. That makes logistics a lot smoother.

Chatbot technology has become highly sophisticated, so it’s no surprise to find applications in the field of logistics and supply chain management. Manufacturers and companies with complicated supply chains have been using AI for years. They’re often among the first to adopt new technologies such as manufacturing software.

We know that chatbots can improve your sales engagement, but now we’re realizing they can improve supplier engagement too. Here’s how.
mobile showing chatbot


Chatbots in Supply Chain Management

Integration is one of the main strategies in supply chain management. It normally takes one of two forms. These are known as vertical integration and horizontal integration.

A vertically integrated company seeks to take control of its supply chain through purchasing, merging, or otherwise gaining control of other companies in its supply chain. It’s a common strategy, especially in the manufacturing sector where companies have long and complex supply chains.

Chatbots have many applications in this type of organization. It’s possible to imagine an artificially intelligent company composed entirely of outsourced functions, with a chatbot forming the vital link between the component organizations.

The AI can place an automatic order for raw materials. A contract manufacturer then does the processing and assembly. A courier transports the products to a warehouse or storage unit. Then you sell the product online, perhaps with fulfillment by amazon (FBA). You could even outsource the marketing and promotion to an ad agency.

What’s lacking from this model is something to link it all together; something to act as a central point of reference. That’s what a chatbot can do.

Understanding complex supply chains


A good understanding of your supply chain is vital for business managers. For some products, it’s relatively simple. Fresh produce and unprocessed food items, for example, need to have short supply chains to avoid spoilage. Having a proper supply chain visibility is fundamental to understand this.

Now consider how long and complex the supply chain for technology can be. A mobile phone or computer would have a vast supply chain. How many exchanges happen between raw material, components, and finished product?

If you think that’s complicated, what about a nuclear submarine or aircraft carrier? Supply chains for things like that are incomprehensible to the human mind. But, with the benefit of chatbots and the sophisticated AI behind them, it’s possible to understand and manage complex supply chains.

Chatbot technology is well suited to companies that hold large inventories. This type of firm is more likely to use the LIFO (last in last out) method for accounting stock. This type of business thus needs to have perfect inventory management processes.

A stock-keeping number, or SKU, is a unique number assigned to a product. It helps warehouse managers keep track of stock. Imagine if every company in your supply chain used the same or compatible SKUs. Using a chatbot, businesses could access and understand all those different elements in real-time.

With information like that, you can keep your lead time low and your eCommerce sales high. Companies that use chatbots in this way gain a competitive advantage through greater efficiency.

Creating Sustainable Supply Chains

Sustainability is one of the most important topics right now in logistics and supply chain management. It’s also one of the areas where chatbots can have a real impact.

A chatbot can act as a virtual assistant in warehousing operations. At a basic level, they can help staff navigate through product locations and check stock. Advanced systems can learn and adapt to more complex situations like closed-loop supply chains.

Closed-loop supply chains are great for the world because as little waste as possible exits into the environment. With AI, companies can create much more sustainable supply chains. It can help them predict where and when to deploy resources and how best to recover them.

In this case, the chatbot becomes the voice of your AI. It makes the task of accessing and analyzing information quicker and easier.

Sustainable supply chains are important to modern consumers. This makes them an excellent way to grow customer retention.
people clustering around


Building Resilient Supply Chains

Recent events have shown that the world can change in a short period. Many things can obstruct the flow of materials to and from a business. A strong, resilient supply chain gives companies an advantage.

A resilient supply chain can adapt and change in response to market conditions. In many ways, it’s ideally suited to implementing AI, and chatbots act as the interface. It doesn’t matter what system you use for inventory accounting – they can adapt and blend into almost any situation.

To create a resilient supply chain, companies need to have a strong grasp of current trends and challenges in logistics and supply chains., inside and outside the organization. You need to know exactly what’s going on at any time within your firm. Chatbots can help. For example, with inventory management metrics.

Finding the right metric and putting it in the correct context can be difficult. Some types of software are easier to navigate than others, and it’s not always intuitive. That’s where chatbots come into their own. Supply chains are increasingly digital, so it makes sense for companies to respond in the same way.

Chatbots are not always reactive – they can be proactive too. They can initiate engagements, preempt an issue before it becomes a problem, and inform the relevant party. If there’s a delay in transport, for example, your AI will spot it (or even predict it before it happens). If that’s the case, a chatbot can contact the waiting customer and give them an update on the status of their order.

Chatbots are brilliant at focusing on the little details because of their computing power. This makes them useful for improving customer experience, which in turn leads to a resilient organization.
person standing with calculator


What’s Next for Chatbots In Logistics and Supply Chains?

Using chatbots has brought all sorts of benefits to businesses in terms of customer service and transparency. In logistics and supply chain management especially, the tech has brought savings in terms of time and cost.

Chatbots allow us to perform complicated tasks with greater ease and efficiency. They’re able to manage some functions unaided, like automatic reordering of stock and providing information on returns. Chatbots can also be part of remarketing strategies, following up on unfinished purchases and abandoned shopping baskets.

One of the most exciting areas of growth for chatbots is in the field of humanitarian aid. By using chatbots and AI, the supply of goods, food, and aid to remote parts of the world is less of a challenge.

With this technology, aid organizations can quickly work out the best route around the globe. By introducing chatbots to act as translators and guides, they can also ensure that foreign aid workers are better equipped to help, support, and engage with communities on the ground.

A Final Thought

The use of chatbots in logistics and supply chain management is a fascinating topic and one that will benefit us all.

However, it remains a slightly controversial issue. It’s generally accepted that the highest achievement of artificial intelligence is to impersonate a human being, but we must ask if that is really what we want them to do? Is there a better use for AI and the chatbots that act as its voice?

The idea of impersonating a human being implies that companies are trying to fool or trick their customers. That’s not a great way to run a sustainable business. It’s about transparency and respect for the customer. There’s something slightly uncomfortable about AI impersonating human beings, and we could ask where that path will lead us in years to come.

Chatbots are fantastic and can bring massive benefits to all areas of business, but let’s not pretend they’re humans. Let’s not try to fool customers, because that will only lead to disappointment. Instead, let’s embrace chatbots for their own (many) virtues, including in the field of supply chains and logistics.


  • Xiaoyun TU

    Xiao is the Global Head of Lead Generation at Brightpearl, a leading retail operations platform. She is passionate about setting up innovative strategies to grow sales pipelines using data-driven decisions.

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