The 3 benefits of Autonomous Inventory Routing (AIR)

What exactly is Autonomous Inventory Routing? 

Autonomous Inventory Routing is a smart technology that automates fuel delivery logistics. It uses algorithms and real-time inventory data to plan optimal delivery routes, based on the user’s priorities. That final detail is a crucial one: going autonomous means no more manual work is involved in the day-to-day planning of transports. But users are still in control of the key parameters the software bases its decisions on. Whether it’s the absolute certainty that stocks will not run out, or lower delivery costs, or more flexibility to take advantage of price fluctuations.

At Bottomline we have spent several years developing the industry’s first AIR platform, capable of fully autonomous, optimized planning. And during recent conversations with clients and industry partners, I sensed that everyone agrees that Autonomous Inventory Routing will become the gold standard at some point over the next few years. After all, AIR offers substantial advantages. In fact, I’m pretty confident that AIR can help solve the three main bottlenecks we often experience in fuel logistics. Let me run past them one by one, starting with the one most likely to keep planners awake at night.

1. How to prevent stock-outs (and create peace of mind)

Stock-outs, fortunately, are not very frequent – our own planners at Bottomline guarantee a 99,9% performance rate. But when they do, the impact can be substantial. A retailer loses turnover and may lose customers. In a VMI setting, the supplier may be held liable for loss of revenue and could lose a valuable client. And even if an actual stock-out does not materialise, the fear alone that one might occur creates uncertainty and stress for planners and retailers alike.

How can AIR help prevent all of this? First of all, it eliminates the uncertainty in a planner’s head that he or she may be overlooking a vital detail. An AIR algorithm, fed with the right data, is able to calculate all possible scenarios at lightning speed. Of course, that doesn’t remove all risks from the equation. A route may be perfectly planned, but there are countless factors that can throw a spanner in the works. Driver mistakes, traffic jams, a CMI client who is late in placing an order, unexpectedly high demand on a sunny day. In such situations, however, AIR offers a crucial benefit: it’s fast and it’s available 24/7.

In CMI setting, that means the software will process an ‘emergency’ order straight away, perhaps even rerouting a fuel truck that’s on the road. In a VMI setting, the software monitors all of the variables itself and can act autonomously. However, there’s a caveat here: AIR can only do this if it is fed with the right, accurate, real-time data. Specifically, an autonomous inventory routing platform needs to have data on historical sales data to calculate expected demand, as well as real-time data on current stock levels at fuel stations and depots, on traffic conditions and the availability and current location of trucks and drivers (and what fuels they are carrying).

2. How to manage and reduce supply chain costs using AIR

The cost of a fuel delivery is made up of three components, all of which can be optimised using AIR: the price of fuels at the depot, the cost of transport and the costs of the operating capital involved. One of the key capabilities of our own AIR platform is that it can schedule deliveries just in time, maximizing the volume of a delivery (thus reducing the transport cost per 1,000 litres). It’s even possible to take price fluctuations at depots into consideration (including any contractual obligations with suppliers!)

Of course, all of this requires a rigorous risk assessment. There is no point in trying to save money only to find yourself confronted with a stock-out. On the other hand, maintaining needlessly large safety buffers is a waste of money. AIR makes it easier than ever to hit the sweet spot. Traditional planning processes are tied to office hours, meaning that a planner typically works on tomorrow’s deliveries - and as a result is forced to build in much bigger safety margins than an algorithm that can adapt to real-time changes 24/7. 

3. How to ensure continuity when experienced planners are scarce 

In many segments of the labour market, companies struggle with a lack of candidates, and fuel logistics is no exception. Even more so when you’re looking for experienced planners. Of course, people can be trained, but it will take up to 6 months for a ‘new’ planner to acquire the experience needed to act and anticipate with the same agility as someone who has been doing it for years. So while no planner is irreplaceable, in most cases the quality of the planning will suffer, at least for some time. And this is not only an issue when people leave the company. Many companies work with relatively small teams of planners, so there may be a bottleneck each time a planner is on holiday or sick leave. Autonomous planning reduces this dependence on experienced planners, by automating the entire process and by producing a planning that is at least as good as one made by even the most experienced planner – and quite possibly even better.

At this point it’s important to emphasize that AIR software will never fully replace human planners. Planning will always require a human touch, for example to verify data or to examine and solve the issues that autonomous planning software flags up: from arranging for the replacement of a faulty tank contents gauge to sorting out alternative transport when there’s a shortage of drivers. In other words: we still need human planners, but their role will change. In a few years’ time, we may no longer call them planners: controllers may be a better description, since their work will focus more on organizational issues. Which, by the way, require less detailed knowledge and so are easier to handle for people who are new to the role. And crucially, AIR will substantially boost a planner’s productivity. Our first projects with AIR suggest that they can take responsibility for 2 to 3 times as many transports.

In short, AIR is here to stay and can make a substantial contribution to the efficiency and cost-effectiveness of supply chains – and not only when it comes to fuels (but that’s a topic best addressed in another blog)

Interested to find out more? Download our e-book on Autonomous Inventory Routing.