Faster and more accurate: Stock management at S'pore logistics firm improves with AI and drones

Home-grown logistics firm YCH Group knew that there must be a faster way to monitor and count the cartons at its warehouse than the manual option.

YCH thus approached the IMDA Open Innovation Platform (OIP) to diagnose its operations and develop a clear problem statement to crowdsource innovative solutions. The OIP had more than 12,000 promising technology firms who were looking to deploy their solutions in new sectors and businesses.

YCH evaluated the proposals through OIP and eventually selected Hacarus, a Japanese artificial intelligence (AI) company that uses the machine learning concept of sparse modelling to extract features from a small amount of data and interpret results reliably.

With help from Hacarus, YCH was able to use the video data collected by warehouse drones to come up with a customised AI model for inventory monitoring and management. By integrating the AI solution with its existing warehouse management system, YCH could cut the time taken for counting the cartons by 85 per cent.

It now takes five minutes to get a drone up and ready, and another 14 minutes to capture footage of the 2-million-square-feet warehouse row by row. In the past, two workers would spend eight hours manually counting the number of cartons in one aisle. One aisle in YCH's warehouse can hold about 600 pallets. And that's not even counting the time spent on lifting cartons from the shelves, opening them and checking that the goods are in order.

The stock count has also become more accurate with Hacarus' AI technology.

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"As our operations currently use autonomous drones for inventory management activities such as counting, we had a wealth of video data from these drone flights," says Mr Ryan Yap, head of growth, innovation and partnerships at YCH Group.

"We had hoped to gain further insights from this data and allow for automated inventory management processes," he adds.

Mr Kenshin Fujiwara, Hacarus' chief executive officer, shares that the company's team of data scientists were able to create a solution by leveraging their experience and research on different machine-learning approaches and architectures from Japan for the Singapore market.

He adds that the knowledge gained from working with YCH would help Hacarus in other markets across the globe.

Using open innovation to find the best digital solution

YCH has been a repeat user of the OIP, with its first challenge statement back in August 2019.

This challenge was the fourth time the company turned to OIP.

Key to winning the challenge - and a deal with YCH - was the creativity of Hacarus' solution and how well it aligned with YCH's objectives.

"We would have a few rounds of engagement with the shortlisted solvers to better clarify the features of the solution and potential challenges in implementing it," says Mr Yap.

"Through this process, we would be able to ascertain the understanding of the potential winner and have a sense of their ability to execute a meaningful POC (proof of concept) and ultimately create a commercially viable solution which would benefit the YCH Group," he notes.

Like in previous years, such close engagements facilitated by the OIP enabled the company to determine if the selected partner is a good fit or had good chemistry with the team, which is a key ingredient in determining the success of any innovation projects, he adds.

Success stories such as the YCH and Hacarus pairing are testament to the potential of open innovation. Even large companies with enormous research and development resources often can find solutions from smaller, nimbler companies.

OIP's strengths

For this purpose, the OIP is like a bridge that connects businesses with technology innovators. It provides businesses with complimentary professional consultancy that includes diagnosing the business challenge, refining the problem statement, crowdsourcing and evaluating the innovative solutions.

The OIP also helps align key performance indicators between the business and tech provider to ensure a successful outcome.

Mr Fujiwara shares that one of the most difficult challenges for AI or data science companies is not being able to connect directly with "customers that have a concrete problem with achievable goals for the solution".

"The OIP is a valuable way to make this happen," he says.

For the YCH project, Hacarus is now seeking to improve the current solution after developing a pilot trial to prove the value of its AI solution.

For local companies like YCH, the OIP helps start and accelerate their innovation journey.

Mr Yap shares that the OIP has helped to encourage his staff to identify and better articulate their own problem statements, instead of sticking to more traditional routes.

"Through practice, our partnership with technology firms will help to encourage a more dynamic and agile approach to innovation, which has become so critical in this "never-normal" age," he adds.

OIP currently has a pool of 12,000 solution across start-ups and established global technology companies. The platform has hosted more than 300 problem statements with over $9 million worth of prize monies.

If you are a company looking for a technology partner to solve a business challenge, complete this request form or find out more at OIP. If you are a solution provider looking to support corporate innovation, join the OIP mailing list for updates on its quarterly open innovation challenges.