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PoweredbyDHLTrendResearchARTIFICIALINTELLIGENCEINLOGISTICSAcollaborativereportbyDHLandIBMonimplicationsandusecasesforthelogisticsindustry2018PUBLISHERDHLCustomerSolutions&InnovationRepresentedbyMatthiasHeutgerSeniorVicePresident,GlobalHeadofInnovationDHLCSI,53844Troisdorf,GermanyPROJECTDIRECTORDr.MarkusKückelhausVicePresident,InnovationandTrendResearchDHLCustomerSolutions&InnovationGinaChungGlobalDirector,InnovationandTrendResearchDHLCustomerSolutions&InnovationPROJECTMANAGEMENTANDEDITORIALOFFICEBenGesing,GianmarcoSteinhauer,MichelHeckDHLCustomerSolutions&InnovationINCOOPERATIONWITHKeithDierkxGlobalIndustryLeader,Travel&TransportationIBMIndustryAcademyDominicSchulzVicePresident,HybridCloudSoftwareDACHIBMDeutschlandGmbHAUTHORSBenGesingProjectManager,InnovationandTrendResearchDHLCustomerSolutions&InnovationSteveJ.PetersonGlobalThoughtLeader,Travel&TransportationIBMInstituteforBusinessValueDr.DirkMichelsenManagingConsultant,Watson&AIInnovationDACHIBMDeutschlandGmbHSPECIALTHANKSTOAlltheexpertsatIBM,DHL,andSingaporeManagementUniversitywhocontributedtomakethisstorypossible.Todaywefindourselvesinanothertransformationalerainhumanhistory.Muchliketheagriculturalandindustrialrevolutionsbeforeit,thedigitalrevolutionisredefiningmanyaspectsofmodernlifearoundtheworld.Artificialintelligence(AI)playsanincreasinglycentralroleinthistransformation.Inrecentyears,AIhascomeroaringoutofresearchlaboratoriestobecomeubiquitousandambientinourpersonallives,somuchsothatmanyconsumersdonotrealizetheyuseproductsandapplicationsthatcontainAIonadailybasis.AIstandstogreatlybenefitallindustries,achievingadoptionleapsfromconsumersegmentstoenterprisesandonwardtotheindustrialsector.Technologicalprogressinthefieldsofbigdata,algorithmicdevelop-ment,connectivity,cloudcomputingandprocessingpowerhavemadetheperformance,accessibility,andcostsofAImorefavorablethaneverbefore.Justastherelationaldatabasefounditswayintocorebusinessoperationsaroundtheworld–providingbetterwaystostore,retrieve,andorganizeinformation–AIisnowfollowingasimilarpath.ItisbecominganintegralpartofeveryfuturesoftwaresystemandsoonwewillnolongerneedtocallitoutasAI.Alreadytoday,AIisprevalentinconsumer-facingapplications,clericalenterprisefunctions,onlineandofflineretail,autonomousmobility,andintelligentmanufacturing.LogisticsisbeginningitsjourneytobecomeanAI-drivenindustry,butthefutureisstillrifewithchallengestoovercomeandopportunitiestoexploit.Withthisinmind,expertsfromIBMandDHLhavejointlywrittenthisreporttohelpyouanswerthefollowingkeyquestions:WhatisAI,andwhatdoesitmeanformyorganization?Whatbestpracticeexamplesfromotherindustriescanbeappliedtologistics?HowcanAIbeusedinlogisticstoreinventbackoffice,operational,andcustomer-facingactivities?Lookingahead,webelieveAIhasthepotentialtosigni-ficantlyaugmentcurrentlogisticsactivitiesfromendtoend.Asinotherindustries,AIwillfundamentallyextendhumanefficiencyintermsofreach,quality,andspeedbyeliminatingmundaneandroutinework.Thiswillallowlogisticsworkforcestofocusonmoremeaningfulandimpactfulwork.WethinktherehasneverbeenamoreexcitingtimeforcollaborationbetweenlogisticsandtechnologyprofessionalsastheyenableAIinlogistics.Wehopeyouwillfindthisaninsightfulread,andwelookforwardtoworkingtogethertobringAIintoyourorganization.Yourssincerely,PREFACEKeithDierkxGlobalIndustryLeader,Travel&TransportationIBMIndustryAcademyMatthiasHeutgerSeniorVicePresident,GlobalHeadofInnovationDHLCustomerSolutions&InnovationPREFACE..................................................................................................................11UNDERSTANDINGARTIFICIALINTELLIGENCE................................................31.1Origin&DefinitionofAI...............................................................................................31.2HowMachinesLearn:ThreeComponentsofAI..............................................................61.3TrendsAcceleratingAI..................................................................................................91.4Challenges&Risks.......................................................................................................131.5WhyLogistics?WhyNow?...........................................................................................142AIBESTPRACTICESFROMOTHERINDUSTRIES............................................162.1ConsumerAI:AmbientAssistanceinEverdayLife..........................................................162.2EnterpriseAI:WorkingSmarter&HarderonBehalfofProfessionals..............................172.3AIinRetail:PersonalizedOnlineExperiences&Self-Learning,ReplenishingSpaces........192.4AutonomousTransportation:AIUndertheHood...........................................................202.5Engineering&Manufacturing:AIShapesthePhysicalWorld..........................................213ARTIFICIALINTELLIGENCEUSECASESINLOGISTICS...................................223.1BackOfficeAI...............................................................................................................223.2PredictiveLogistics:TheNe