Amazon The company is focused on using artificial intelligence to minimize the distance between products and customers and speed up delivery, a top executive told CNBC.
Stefano Perego, Amazon’s vice president of customer fulfillment and global operational services in North America and Europe, outlined how the company is using AI for logistics.
Perego said one area is transportation, including mapping and route planning that takes into account variables such as weather.
Another area is helping customers search products on Amazon to find the right product.
But Amazon’s current focus is on using AI to understand where inventory is located.
“I think one of the areas we see as important to lowering the cost of service is inventory placement,” said Perego.
“Now, you are familiar with the vast assortment we offer our customers. Imagine how complex the problem of deciding where to place that inventory unit is. Placing them in a way that reduces the distance enables fulfillment to customers and increases delivery speed.”
Amazon is focusing on its so-called “regionalization” efforts, where it ships products to customers from the warehouse closest to them rather than from different parts of the country.
But to do that, we need technology that can analyze data and patterns to predict which products will be in demand and where.
That’s where AI comes in. If the product is close to the customer, Amazon will be able to offer same-day or next-day delivery, similar to the Prime subscription service.
Perego said the effort is progressing well. In the U.S., more than 74% of the products customers order now come from fulfillment centers within their region, according to Amazon.
Amazon is also using robots in its fulfillment centers to help with repetitive tasks like lifting heavy items.
The company says 75% of orders from Amazon customers are partially fulfilled by robots.
There is debate about how robotics and artificial intelligence, such as ChatGPT, an AI chatbot developed by startup OpenAI, will impact work. A Goldman Sachs report earlier this year suggested that automation could affect 300 million jobs and cause “significant disruption” to the global labor market.
Describing automation as “collaborative robotics,” Perego emphasized how Amazon sees humans and technology working together.
“I think what’s happening right now is a transformation of the type of work,” Perego said.
The executive said that as automation and AI become more prevalent, the jobs workers do will change, not eliminate them.
“Eventually, the types of jobs employees will be asked to do in fulfillment centers will become increasingly judgmental jobs,” Perego said. “And heavy lifting and repetitive tasks will be done by robotics. That’s fine. This is a transformation, not a replacement.”