Back to Insights AUTHOR
Matt Pyle
DATE PUBLISHED
15.08.17

Okay Google, how can I make operational efficiencies using AI?

In a previous article, I discussed how Artificial Intelligence (AI) can help retailers improve their customer experience. What is equally important, less visible and arguably presents more of an immediate business case is using AI to help create operational efficiencies across a cross-functional large-scale organisation.

Working hard behind the scenes and out of customer view, artificial intelligence can provide significant efficiencies for offline retailers. Machine learning and algorithms can control and run stock supply & management processes, staffing/resourcing levels, the length of the queues at the stores or even replace traditional checkouts all together. By using mass amounts of historical data, forecasting and predicting becomes less of a lottery for a machine and comparisons can be made against weather patterns, stock levels and consumer behaviour. Not only will AI be capable of predicting which products you should order and when, but it will order for you, ensuring the stores keep their managed inventory at a “just enough” level.

An example of using artificial intelligence to solve an operational problem, and using the power of machine learning is Morrisons implementing a new sales-based ordering system. Working with Blue Yonder, Morrisons have introduced a new system in all 491 of their stores to optimise replenishment and automate ordering. By automating over 13 million ordering decisions a day, it has had an immediate effect with shelving gaps reduced by up to 30%.

This has been achieved by transferring those decisions away from humans who are prone to mistakes, can make decisions using “gut feel”, and unable to memorise vast quantities of historical data, to a machine who can make fact-based reasoning. This has arguably freed up the store colleagues to do what they do best, provide personalised customer service.

For other vertically integrated organisations, there are endless opportunities for the adoption of artificial intelligence such as warehouse robots using lasers and 3d depth sensors at DHL, identifying and operating a data-driven pricing strategy, automating HR recruitment and compliance, ensuring accuracy of financial reporting amongst others.

Despite the ever increasing visible benefits, some sectors have been reluctant to adopt Artificial Intelligence. There are many valid and invalid fears and concerns that arise before introducing fundamental change in front of their loyal customers. Outside of the usual sci-fi fears of the robots rising up and disobeying their human masters (“I'm sorry, Dave. I'm afraid I can't do that.”), the main barriers to entry are the fear of change, implementation cost and a lack of understanding.

Whatever you think about the rise of robots within our industries and companies, the AI Revolution is on it’s way and can shake up the world in a comparable way to the Information Age or the Industrial Revolution before it. Recent advancements have brought us “Augmented Intelligence”; robots that are designed to assist humans rather than replace them but in the next twenty years we will see a move towards fully-automated AI that will replace millions of existing Retail jobs. It’s time now to look at the benefits of researching and adopting increments of Artificial Intelligence whilst having a serious and open debate about the future impact on our livelihoods and ways of working as we know it.

After all, should we really be ignoring the possible $814bn that AI could add to the UK economy?

Matt is a Project Manager, who brings a wealth of knowledge within the retail sector. Prior to joining Answer, Matt had worked within project delivery for Morrisions helping to deliver digital improvements internally and throughout their 400+ stores. He is passionate about agile delivery of quality software that enable clients to meet their expected outcomes.

We help retail companies of all sizes to shape, design and develop innovate bespoke digital experiences that put digital enablement at the heart of the company to increase growth and fulfill their potential.

Get in touch with our Head of Retail, Richard Ellis, at richard.ellis@answerdigital.com to see how our development and user experience expertise can help you deliver suitable AI experiences.