Keeping An Eye On AI - While Still Struggling With Constant Disruptions
If you’re a regular reader of this newsletter, you know that we’ve been walking a fairly tight line lately. On the one hand, as most retailers (and the majority shoppers) are increasingly struggling to figure out how to keep the lights on, technological advancements continue to march on. AI, in particular.
So while we realize it’s quite difficult to be recommending that retailers go out and invest in technology at a time when resources are so tight, it’s also worth keeping an eye on the very types of technologies which can help model for – and react to – these exact types of disruptions as they arise. Hence our latest report, The Case For An AI-Enabled Retail Supply Chain. Because the world doesn’t appear to be getting any more stable any time in the near future.
What did we find? For starters, retailers’ interest doesn’t appear to be shrinking – even if their discretionary budgets most certainly have for the time being. Consider some of our suggestions:
Accept The ‘New Normal’ To Become The ‘Never Normal’
No one can accurately predict what retail will look like a few months from now. However, absent a vaccine or successful treatment, it is fair to assume that COVID-19 will continue to interfere in very real ways for quite some time to come. And while shoppers tire of the “hunker in a bunker” technique, many will likely accept the inherent risks associated with leaving their homes to visit stores as they re-open across the globe in phases, but in far different ways (and in far fewer numbers) than pre-outbreak. So while we certainly won’t be returning to what we all considered “normal” just a few short months ago, it is important to embrace “the next normal” for however long it lasts. This means the ability to think differently and adapt quickly will be key to not only retailers’ success, but in many cases, their survival. The faster we accept that these staggering challenges are be around for a while, the quicker we can move on to trying to solve for them.
Model Everything You Can
In an era of such unpredictability, the ability to model potential outcomes becomes all that much more important. Our retail respondents show a moderate appetite to use predictive models to anticipate supply chain disruptions - tools that can also recommend cost-optimized corrective actions – but beyond that, it is clear that AI-enabled predictive models for such things as labor and transportation costs across the supply chain – or finding optimal DC-to-customer locations to lower costs while still satisfying customer needs - are not yet seen as must have technologies.
This is a clear miss on retailers’ parts, as historical data won’t mean much for the foreseeable future. In the midst of a pandemic, the ability to build a model for what Q4 might look like from last week’s data will be far more valuable than using Q4 2019 information.
Try To Keep The Past In The Past
Retailers’ supply chains have long-sacrificed flexibility for efficiency. While this may have worked in the past, it does not work right now. However, retailers are not in a position to adapt an “it is what it is” mentality here – they must endeavor to introduce nimbleness into how they source products, where they source them from, and what the entire delivery process looks like – and quickly. Those who are clever will be quick to abandon past practices in order to meet customer demand in the new normal.
Stop Thinking Of AI As ‘The Future’
With so much discussion around AI at technology conferences, on webinars, and in print, it can be easy to dismiss this as just another over-hyped technology. We, ourselves, felt that the amount of “AI-empowered” messaging at the 2019 NRF Big Show bordered on the absurd.
However, while there certainly is some degree of over-hyped “future-speak”, the fact is there are genuinely powerful use cases of AI and ML being used in retail right now, changing the way retailers make critical decisions. AI is no longer a concept car – it’s real, and it’s available to all willing to sift through the hype to discover its most powerful right now applications.
We think you’ll find the full report quite intriguing.