Transforming warehouse management with AI
A project to optimize warehouse management with AI at a Sandvik distribution center has resulted in big improvements to operations and employee well-being. Set to be rolled out to other sites, these AI solutions mark a big step towards the future of logistics.
Sandvik Machining Solutions distributes thousands of cutting tools daily to customers around the world from five distribution centers located around the globe. The Americas Distribution Centre (ADC) is one of the largest. Located in Kentucky, it employes around 80 people to ship an average 3,000 parcels a day.
The ADC contains almost 100,000 different items in approximately 250,000 locations, spread across a floor space that is the equivalent of three football pitches long. The employees walk an average of 8 km a day, pushing a cart, to pick items and fulfill customer orders. When the Sandvik Artificial Intelligence and Automation Center for Enablement (CFE) team saw the ADC operations, they saw a big opportunity.
AI in supply chain and logistics
“At Sandvik, we're always striving to make improvements to operations and improve employee wellbeing,” says Jason Back, Global Team Lead for DC IT, SMS Logistics. “It was a huge opportunity for us to work with the CFE. I knew where to start because I had tried to optimize slotting, which is how we locate each of the items in the warehouse, ten years ago. But in those days the analytics tools were limited. It took the computer about six hours to slot one item while AI can do it within fractions of a second. It is mind boggling!”
Smarter slotting for faster fulfillment
The AI CFE-team worked together with analytics experts and other employees from SMS Logistics to develop AI solutions for the ADC. These included a new AI enabled slotting tool that uses data, such as what combination of items are ordered most frequently by customers, to recommend where items should be located for picking. “The initial analysis predicts a seven percent improvement in efficiency,” says Back. “But optimized slotting really saves us walking distance. If you insert the locations into the AI it can plot the shortest walking path for employees to pick items on an order list. It is done dynamically for each order list and generates the optimized path in around two and a half seconds. It has an incredible amount of power behind it.”
The future of AI in logistics
“We have an exciting journey ahead of us leveraging these AI technologies,” says Josse Coudré, President, SMS Logistics. “Using data to manage the physical flow of goods improves efficiency, productivity, transparency, sustainability, employee well-being and ensures a more reliable performance and better experience for our customers. It is the future of logistics and we have made a big step forward towards that future.”
The AI project has resulted in clear improvements at the ADC, such as a 19 percent reduction in walking distances. “That is a big deal considering the employee average of 8 km a day”, says Coudré. “It is a big benefit for our employees as it reduces fatigue and wear and tear on their bodies, so less injuries. It also means improved operational efficiency, which translates into increased productivity and the flexibility to meet higher customer demands.”
AI also makes Sandvik a more attractive employer.
Providing an automated environment, where employees are supported by AI in their day-to-day jobs helps us attract the talent we need.
Expanding AI-powered logistics globally
The AI tools developed at the ADC will now be rolled out to the other Sandvik distribution centers. “The technology and the process we've developed is game changing and we are now looking at how we can translate this technology to other centers this year,” says Coudré.
The ADC is also planning for the next step in their work to improve efficiency. “We plan to bring in robots this year to replace the carts that employees push around the warehouse,” says Coudré. “The AI slotting tool will reduce the distance the robots have to travel.”