For some businesses, global shocks have historically welcomed moments of truth.
They can quickly transform the business landscape and the terms of competition. But businesses that make brave moves during challenging times can transform adversity into gains.
The SARS epidemic of 2003 is often accredited with providing growth to eCommerce giants like Alibaba and JD.com. Enterprises like American Express and Starbucks pivoted through the global financial crises of 2008-2009 to digital operating models that empowered them to flourish and radically grow shareholder value.
In this sense, COVID-19 is expected to be no different from other crises.
It will significantly accelerate many key trends that were already well in progress before the outbreak, and that will prolong as businesses shift their focus to recovery. For example, rather than immensely focusing sourcing and production in limited low-cost locations, businesses will develop increased redundancy into their value chains. Consumers will buy more goods and services online. And ever-increasing numbers of people will work remotely.
I am confident that the application of artificial intelligence will be enormously valuable in facilitating businesses to adjust to these trends. For instance,
- Advanced robots that can identify objects and manage tasks that formerly required humans will stimulate the functioning of factories and other facilities 24/7, in more locations, and with minimum added cost.
- AI-powered platforms will facilitate businesses to replicate live work environments better.
- With machine learning and advanced data analytics, AI will empower businesses to identify new consumption patterns and provide “hyper-personalized” products to online consumers.
- The most thriving AI use cases will be those that effortlessly combine AI with human judgment and experience.
Businesses that are leading on these trends and have already commenced the AI journey will thrive in the post-COVID world.
Why will AI be a must in COVID-19 affected world?
Businesses are already well-versed with digital technologies such as automation and basic data analytics.
But AI now powers machines to solve problems and act.
AI can analyse enormous volumes of data to comprehend the underlying patterns, empowering computer systems to make complex decisions, predict human behaviour, and identify images and human speech, among several other things. AI-powered systems continuously keep learning and adapting.
These capacities will be massively valuable as businesses confront and adjust to the new normal of the present crisis and its aftermath. This new normal will remarkably influence business costs, revenue, and operating models.
How Can AI Support Businesses?
- Uncertain and volatile demand and supply chains
- Operation and Supply Disruption
- Suboptimal Workforce allocation
- Evolving Consumer Priorities
How Can AI Help
- Update forecasts in real time
- Accelerate decision-making
- Flexibly reallocate resources
- Improve cost efficiency
- Optimise remote offerings
- Reallocate workforce
- Rapid response to new behaviour
Use Case Example
- Digital control towers and decision support
- Real-time value chain optimisation
- Labour allocation analytics
- Real-time product customisation
Let’s take a look at each of these in detail.
Redundancy in Value Chains
A short time ago, optimising cost and time was the principal goal in designing global manufacturing footprints, supply chains, and logistical support.
Often, that meant focusing production in high-volume factories at one or two low-cost locations. Inventory and excess capacity was compared with waste. But lately, rising economic nationalism and trade barriers (two elements of the “new globalisation”) started forcing businesses to reimagine their supply chain strategies and rediscover the merits of redundancy. The pandemic, which has interrupted global supply chains, has moved redundancy higher up on business agendas to mitigate risk and weather the next global shock.
However, redundancy and duplication involve substantial costs. AI offers businesses the capability to build resilience into manufacturing operations and supply chains, while simultaneously minimizing cost and damage. AI empowers organisations to optimise costs in every plant with predictive maintenance and better planning. It also allows them to run a larger number of small, efficient facilities nearer to consumers—rather than a few massive factories in low-wage locations – by employing advanced manufacturing technologies autonomous robots that require few workers.
According to McKinsey, 61% of manufacturing executives report decreased costs, and 53% report increased revenues as a direct result of introducing AI in the supply chain.
Evolving Customer Patterns
COVID-19 is radically transforming consumption habits globally – and influencing business revenues – as consumers are going online to make more purchases but prefer to be at home to consume food and beverages.
Amazon is spectacularly building up its fulfillment capacity, while online grocery marketplaces are stating an enormous rise in deliveries of fresh vegetables. Movies are being released for digital streaming, whereas fitness enterprises like Peloton are introducing home-fitness services.
As business focus shifts to recovery, more businesses are predicted to employ AI-powered solutions to reignite top-line growth. AI has the supreme potential to identify emerging trends and changes in consumer preferences. Even in human-centered sectors like fashion, some enterprises are boosting their business intelligence capacities with AI to detect trends early on, like which colors are expected to be well-liked in the upcoming season.
AI empowers businesses to be hyper-personalized products to enhance customer engagement and sales.
For instance, Starbuck’s Deep Brew platform gives coffee recommendations based on the weather, the time of the day, or a consumer’s previous purchases and taste profile.
AI can also improve the ideation process engaged in developing new product offerings and accelerate R&D in industries like pharmaceuticals, which has conventionally depended on a long trial-and-error process to create new drugs.
Producers of fast-moving consumer goods are exploring the gold mine of consumer data on Alibaba’s TMIC consumer analytics platform to create new products bespoke to Chinese consumers (such as a chili-flavored Snickers candy bar) and to supervise the performance of new products.
Remote Ways of Working
Remote work due to the COVID-19 may be impermanent. But much of it will continue as more people experience the advantages of keeping away from hourlong commutes and more employees find they can work effectively from home.
Businesses will require to leverage advanced ways of engaging human resources to mitigate the risk of further commotions and remain competitive. AI is no silver bullet for employing innovative ways of working, but it can play a significant role.
AI-enabled businesses have natural benefits in remote work situations, for they tend to be developed around modularity and agility, which are fundamentals to success in software-centric businesses. AI also aids online marketplaces for high-skilled, on-demand labor.
Upwork is an AI-powered platform that connects freelance professionals with potential employers, while Google’s Kaggle empowers an online community of data scientists and AI/ML professionals to come together and solve data challenges.
Finally, AI tools enable businesses to leverage predictive analytics to more precisely forecast sales and operational challenges.
Placing AI at the Crux of Business Models
The present crises and its repercussion should encourage businesses to adjust their business models to the new normal. Leaders will reinvent themselves by placing software, data, and AI at the crux of their businesses.
By now, AI is at the heart of a few piloting ride-hailing platforms, for instance, identifying the best routes, onboarding drivers, and even facilitating to identify frauds.
Few age-old incumbents in industries as diverse as mass retail and finance are now evolving themselves in preparation for an AI-based future. Such a disruption demands that AI be regarded as central to the business models that differentiate a business and how it generates value, as well as to its operating model.
So far, most businesses have converged on reactive measures. But now is the ideal time to take bold, transformative actions.
Businesses that have already brought in AI use cases must press ahead instantly to gain maximum impact in the near term. They should not falter to scale up because AI will be a remarkable lever that can facilitate them to manage this crisis. Businesses should view the current slowdown in everyday operations as a chance for strategic reflection about how value creation mechanisms are evolving and how to prepare for the postcrisis world.