AI in distribution at DigiKey

AI in distribution at DigiKey

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By Nick Flaherty

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Artificial intelligence is used in a number of areas at global distributor DigiKey, from pricing to inventory management and now a new chatbot.

“We are using Google to bid on adwords and using AI to build the pricing daily,” said Kevin Walseth, manager of technical marketing manger at Digikey tells eeNews Europe.

“It will look across competitors and suppliers and can set a price,” he said. “We can set what prices to change or not, taking into account the time on shelf to move inventory or other new products in that category.”

DigiKey opened its 2.2 million sq. foot Product Distribution Centre expansion in 2022, one of the largest warehouses in North America. This now houses over 15m products from 2900 suppliers, and ships 5.7m internet orders a year that are shipped around the world form Minnesota.

With all that data on the sales, the AI is used for managing the products in the centre.

“We use the inventory management so we know what the high running parts, and where to position them in the warehouse,” he said. The AI can also be used to provide harmonisation codes for overseas shipments. “We use AI to sort those into different categories, which countries it can be shipped to for example.”

With the advent of generative AI, chatbots have become an interesting application for AI. Here it is the retrieval and generation (RAG) capability that is key.

“It’s here, it’s now, AI is everyone’s everyday life, using ChatGPT,” said Walseth.

 “We have CHIP the AI bot that handles internal IT requests, it can retrieve documentation, forms, submit on behalf to IT, it has machine learning built in, that’s in the last two months and we have had over 1000 requests in that time,” he said.

“For example, we have 2FA and to get into things, and when you don’t have your phone the bot will fill the forms and send them to IT to sort the issue.”

The company is now in discussion on using a chat bot for internal tech support for example if a connector is not available or obsolete then what else can be used.

These are likely to be hosted in the cloud, he says, where DigiKey has invested in cloud-based tools like Snowflake and Sigma to standardize, house and visualize its data.

“We have so many tools we use in the cloud, and you want to link to all those tools. But wherever we use it has to be secure and that’s what is slowing down the fast moving AI. We have to take our time and get it right and keep it secure.”




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