Recently the World Health Organization announced that they no longer consider Covid-19 to be a public health emergency, coinciding with an end to the U.S. national emergency response to the pandemic. While well received, these official milestones have not put an end to the longer-term impacts of the pandemic, particularly when it comes to the global supply chain.

From a clogged parts pipeline and high demand that’s resulted in backlogs, to the continued trend towards reshoring, we’re still seeing lingering impacts. While many companies cut costs during the pandemic, such as Toyota developing a solution for each sector within its supply chain, the moves to rescue expenses and develop a more resilient supply chain continue even post-pandemic.

Cutting costs in the wake of the Covid-19

In April, it was reported that FedEx intends to merge its express, ground, and other services, streamlining its delivery operations and reducing costs. This consolidation is expected to save the company $4 billion, enabling it to compete with UPS on affordability. Conversely, Amazon, which rapidly expanded its fulfillment network to meet the surging demand for e-commerce during the pandemic, has had to curtail its operational expenses due to excess capacity that has hampered its profitability.

If business titans crucial to global trade and the supply chain, like FedEx and Amazon, are looking to shave down costs post-pandemic, it’s no stretch that many other smaller and mid-size companies impacted are also looking to lower costs and prepare themselves for what’s next.

And if the past three years have taught us anything, it’s that the supply chain and global trade will continue to be unpredictable and face disruption, even with the pandemic in the rear-view mirror.

Tech’s Emerging Promise in Slashing Supply Chain Costs

According to an April report by The Wall Street Journal, CFOs are exploring ways to enhance the resilience of the supply chain, such as implementing more automation. Companies are recognizing the need to be better prepared for disruptions in the post-pandemic era and are leveraging all available resources to achieve this.

According to Gartner, 50% of top companies worldwide will leverage AI in their supply chain operations by 2025. With AI rapidly advancing and cost reduction being a top priority for CFOs, AI-powered products, and services are poised to become a critical component in ensuring supply chain resilience and efficiency.

I mentioned earlier the excess inventory problem that Amazon is addressing. That’s just one area where AI can play a role. It’s here where AI is playing a larger role in handling manual tasks, such as inventory updates and risk management, traditionally performed by humans. AI-powered tools can also detect labeling errors and identify items in the warehouse more accurately when processing inventory data.

We’re also seeing retailers employing autonomous driving to cut costs and focus on sales, thereby enhancing the customer experience. Customers and employees can receive live updates on the status of their orders as they move through the supply chain. Automation can also make it easier to ensure compliance with standards by alerting businesses to potential problems.

AI to Help Reduce Supply Chain Risk

AI can also be instrumental in reducing risk in parts of the supply chain, such as compliance. For instance, when shipping goods human error can occur when assigning HS codes, which are numerical values used to classify trade products. With varying code lengths across different countries, it’s an arduous task for humans to manage. AI can quickly and efficiently allocate HS codes, making it a reliable, cost-saving method for companies. With the help of these tools, companies can expect to save 85% of their funds through process automation.

The same technology can also be used to calculate tax and duties, providing accurate calculations at the point of sale. The accuracy of this data is crucial for successful cross-border trade, and parcels must be trackable regardless of the delivery method. The implementation of AI can help manage these tasks, preventing errors and ensuring compliance with policies like the STOP Act and ICS2.

With companies increasingly searching for ways to cut costs within the supply chain, AI has emerged as a viable option to address both old and new challenges. As the supply chain industry continues to evolve, companies that embrace AI and data solutions may find themselves better positioned for success in the long term post-pandemic. The potential benefits are significant, and the time to act is now.

Chris Lentjes, CEO – U.S., Eurora

Author: With over two decades of experience in global e-commerce logistics, Chris Lentjes serves as US CEO for AI/ML cross-border compliance platform Eurora.