Capgemini: The secret to AI success for retailers
Artificial Intelligence (AI) will profoundly impact all aspects of business in the coming years, across many industries. In the retail sector, the impact of AI can already be seen on a broad scale. It’s more than likely that you’ve interacted with a chatbot on a retailer’s website, which is a prime example of AI in action. Behind the scenes, many retailers are using AI and analytics to gain marketing and sales insights from the vast amounts of data that consumers produce during their physical and digital interactions with brands and social activity online.
A recent Capgemini report found that many retailers (74%) are centering their AI strategy on customer-focused use cases. In addition to these customer-focused deployments, AI holds another big opportunity for retailers in operations, and it’s a $340 billion opportunity. The next step for retailers is to utilize AI in operations – across areas of the supply chain such as demand planning, procurement and distribution.
Below, we look at three prime use cases for AI across operations and explain their benefits.
Demand Planning and Replenishment
AI can optimize demand planning and replenishment in several ways – from product catalogue management to advanced demand planning. For example, advanced demand planning involves predicting product sales trends so that retailers can meet sales/customer needs at the right time with the correct service or product in the right location, and AI can be used to accurately predict future product demand. The technology works by analyzing both historical company data and the data produced by numerous complex factors that influence product demand, both structured and unstructured, based on socially influenced dynamic attributes. The AI technology then automates replenishment triggers so that retailers consistently have the right amount of product in stock. This results in less waste, reduced out of stocks and increased sales. Improved demand plans even impact distribution. For example, an international multichannel retailer integrated merchandise and demand plans for collaborative demand planning, including key margin metric planning and reporting, in-season planning of sales, stock and open to buy, resulting in greater control of stock and ultimately leading to an overall 8% improvement in in-stock position and a 7% increase in sell-thru.
Procurement and Sourcing
Sourcing is one area where AI can bring about transformed efficiency. For example, AI-driven image recognition technology and blockchain can be used to solve significant problems related to product quality and provenance. In the grocery and food segments, in particular, we can evaluate food safety and quality of perishables using image-based recognition software to evaluate and predict product shelf life using visual recognition factors. Robotic Process Automation (RPA) can also be used to reduce human error and increase productivity in procurement.
An example of this is Coca-Cola Philippines and its procure to pay process automation innovation. In 2016, Coca-Cola Philippines moved away from paper and people-based invoice processes to utilizing RPA. Using RPA, invoices are automatically captured and sorted according to pre-specified rules. Verified invoices are automatically posted for payment and exceptions are routed to a workflow where assigned personnel are alerted to take actions on the flagged entries. After deployment, the company improved goods receipt on time to 99% in less than 18 months. There was also a significant reduction in invoices with issues from 25% per month to below 10%, out of the average of 24,000 invoices processed monthly.
Distribution and Logistics
AI has a huge role to play in distribution and logistics, particularly when it comes to warehouse and backroom automation, and fleet management. Today’s consumers want deliveries to be quick and arrive when and where they want them. For delivery vehicles, this demand is putting increased pressure on human insights used to inform the delivery processes. AI can help to optimize delivery routes using means such as satellite imagery and intelligent algorithms. Mechanizing store back-rooms allows for hands-free picking near the customer’s home.
AI can also be used to monitor product conditions to ensure they are of satisfactory quality. Capgemini is delivering a proof of concept for a company deploying a “smart container” management system based on blockchain technology. Smart containers are transportation containers equipped with sensors that transmit quality related data (e.g. temperature, pressure, vibrations) to all affected members of the supply chain. The monitoring of real-time quality data enables the company to minimize their response time to events. For example, if the temperature drops below a certain threshold during transport and spoils the goods, a shipment of replacement products can be triggered in real-time. These “smart containers” are improving transparency and efficiency across the supply chain.
These use cases demonstrate just a handful of the opportunities presented by AI to improve retail operations and retailers’ bottom lines. As well as deployments focused on the customer, it’s clear to see that there is huge potential for retailers to optimize and streamline operations utilizing AI. By implementing use cases across planning, procurement and distribution, retailers will improve efficiency and maximize profits. Such ‘quick win’ projects are also easy to implement, easy to scale, and provide a quick return on investment. When implemented with purpose, AI can deliver value from day 1 and lay the foundation for sustainable process and culture shifts in organizations.
Ultimately, retailers still have a long way to go in realizing the full potential of AI. To gain momentum with their deployments and stay competitive, it is important that retailers not only solely focus on consumer-focused projects, but also explore the huge opportunity presented by AI in operations.
The Ultimate Procurement & Supply Chain Event
Global eProcurement leader JAGGAER has been announced as the latest sponsor for Procurement & Supply Chain Live.
Recognised as a Leader by Gartner in both Strategic Sourcing and Procure-To-Pay, JAGGAER’s direct and indirect eProcurement solutions help over 1850 customers, connecting to a network of 4 million+ suppliers in 70 countries.
From September 28th-30th, Procurement & Supply Chain Live gives you the opportunity to network with C-level executives, gain insight from industry pioneers and walk away with actionable insights that accelerate your career. By the end of the week, we promise you’ll have the skills to solve the world’s most pressing supply chain and procurement challenges.
Whether you attend virtually or in-person, you’ll strategise how to cope with global disruption, learn from industry pioneers - including newly announced speakers Chris Shanahan, VP Global Procurement/CPO at Thermo Fisher Scientific; Jim Townsend, Chief Procurement Officer at Walgreens Boots Alliance; and David Cho, CPO at University of Massachusetts - and walk away with tips, tactics, and tangible connections.
How to Attend
In a COVID-disrupted era, we know that the majority of people would rather avoid travelling for events─why take the risk, right? In response to the continued disruption, BizClik Media Group has decided that Procurement & Supply Chain LIVE will offer the best of both worlds through hybrid accessibility.
That means you and your peers can attend the event in person or virtually ─ with no disadvantages for people who choose not to make the trip to the Tobacco Dock venue.
Procurement & Supply Chain LIVE will be held at the Tobacco Dock in London, an industry-leading venue that is renowned for delivering world-class events. For attendees’ peace of mind, the venue is working to the government-endorsed AEV All Secure Framework, alongside mia’s AIM Secure and ‘Good to Go’ accreditation, they will ensure that we achieve a COVID-secure environment to facilitate all of your networking needs.
Our physical venue is both historic and stunning, but it has no bearing on the information that you and your peers can gain from the event. You can still absorb it all, interact with other attendees, and enjoy the conference experience on your alternative, virtual platform.
The platform will feature live feeds from all of the stages, as well as virtual networking areas. So, if you want to avoid travel, it’s not a problem! You can still get involved and enjoy the entire experience from the comfort of your own home.
New Speakers for Procurement & Supply Chain Live
VP Global Procurement/CPO at Thermo Fisher Scientific
Shanahan is Vice President, Global Procurement/CPO for Thermo Fisher Scientific in Waltham, MA. He joined the company to lead efforts in leveraging scale in the marketplace, develop capability and processes across the company, while transforming the supply base. He co-authored the Procurement Leaders Handbook, and holds a Master’s in Business Administration from Open University in the United Kingdom.
Chief Procurement Officer at Walgreens Boots Alliance
Townsend leads Walgreens procurement (Goods and Services Not For Resale). Prior to joining Walgreens Boots Alliance, he worked for Anglo American and General Electric also within commercial procurement. He has worked overseas extensively, in both manufacturing and retail environments. He holds an MBA in Strategic Procurement from the University of Birmingham, UK and a Bachelor’s Degree in Mechanical Engineering.
CPO at University of Massachusetts
Cho is Chief Procurement Officer for the University of Massachusetts, Unified Procurement Services Team (UPST), comprising strategic sourcing, contracts, supplier management, procurement operations, accounts payable, travel services, and customer service that provide quality service to the UMass system. Cho has 25-plus years of strategy and operations management consulting and industry experience. He was formerly Global Head of Sourcing and Vendor Management at BlackRock.
CLICK HERE to order now and make the most of our early-bird offer. Ticket prices increase over 50% soon!