The quest for a better online shopping experience for customers is never over. Retailers continue to invest in AI-powered personalization to drive higher customer satisfaction and larger average order values. And while personalization is one of the biggest buzz words of the day, there’s another P-word that’s important for retail-related AI. It’s AI-Powered Planning.
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The pandemic has thrown a wrench into retailer’s supply chains, forecasting, and fulfillment. The challenges retailers’ are facing in choosing products, producing them, and getting them to their customers’ door steps can have a major impact on the bottom line. I’ve included a few examples where weaving in machine learning and AI-powered planning could be a major game-changer (and important troubleshooter) for retailers.
Adopt AI-Powered Planning
As retailers become more familiar with artificial intelligence and machine learning through personalization projects, there’s an opportunity to apply those learnings to another major revenue driver (and cost saver): optimized planning.
Retailers can introduce AI into their processes well before the customer even begins their journey by optimizing the cost of goods, the largest cost category. By optimizing the costs of selection, assortment, pricing, promotion, inventory levels, and distribution of products and services retailers ensure revenues travel up and to the right.
Optimize Your Supply Chain
More likely than not, your supply chain around the world has been disrupted by the pandemic, and the situation is changing in real time — which means your manufacturing and shipping timelines could be changing at this very moment. Or maybe the supply chain is flowing but manufacturing wasn’t prepared for a spike in orders. For example, the sale of bicycles jumped 121% in March, an unexpected surge in demand that has bike shops adding to a growing waitlist as manufacturers figure out how to increase production.
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In order to respond swiftly, protect revenue targets, and avoid unexpected costs, retailers should invest in AI-powered solutions that provide insights at each part of the journey. Prioritize technology that allows you to quickly aggregate and analyze data to not only identify where problems are, but troubleshoot potential issues along any part of the supply chain, sales cycle and customer journey.
For example, Macy’s announced several updates to their supply chain including more data-driven sourcing decisions, detailed cost analysis, and greater coordination across design functions. They expect these processes to generate a 6% to 8% reduction in the cost of goods over the next three years.
Connect Your People and Processes
Processes, systems, and people are all factors that can have a significant impact on production. Let’s say there’s an 8-week delay in the shipment of a key component used to build vacuums. With AI-powered search and connected data sources, companies are able to see where the problem originated, what aspects of the business it will impact and if there are any customers on back order for vacuums that require that key component. With all of the information at hand in real-time, companies are able to provide more knowledgeable customer support and work towards a solution before it grows into something that could tarnish the brand’s reputation in the long-term.
For these cross-functional teams to track and accomplish their shared goals they must be able to connect the dots in real time. Louise Columbus, Principal, IQMS, part of Dassault Systèmes explains: “Machine learning has the potential to bring an entirely new level of insight and intelligence into these teams, making their goals of optimizing production workflows, inventory, Work In Process (WIP) and value chain decisions possible.”
Focus on Opportunities
The past few months have put all the focus on retailer’s biggest store—online. And while the customer is still king, there are major cost savings to be found in directing resources to AI adoption for planning processes and other backend mechanics that customers aren’t privy to. We’re likely to see incredible innovation as a result of the past months of unprecedented upheaval. Stay open to identifying new places to implement AI-powered projects over the next several months and find a solution that could take you roaring into 2021.
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