AI-driven inventory management systems process hundreds of demand-influencing factors and draw conclusions that increase forecast accuracy. This is according to Mikko Kärkkäinen, CEO and co-founder of RELEX Solutions.
“In a world where uncertainty is the only certainty, grocery retailers are facing a range of strategic challenges,” says Kärkkäinen. “Retailers who fail to harness the speed, accuracy and efficiency of data-driven algorithmic decision-making will be overtaken by their rivals”.
The main challenges posed in 2023 include:
- Supply chain disruptions, caused by external and internal factors.
- Margin pressure due to inflation and a looming recession.
- Continuously evolving market conditions and consumer expectations.
- Abrupt fluctuations in consumer demand since the start of the COVID-19 pandemic.
- Pressure from consumers, regulators, and NGOs to become more sustainable.
These factors, combined with today’s cut-throat retail competition, leave no room for inefficiencies as pressure mounts due to the ongoing energy and cost of living crises. AI can ease the strain, with a recent report from Gartner outlining that customer satisfaction will grow by 25% in 2023 in organisations that use this tech.
Kärkkäinen continued, “The best-in-class supply chain planning solutions leverage pragmatic AI and unsurpassed computational power to optimise large amounts of repetitive and logical tasks, such as demand forecasting, store replenishment, and planogram optimisation, autonomously without human intervention”.
According to a recent study by IBM, 60 percent of consumers choose the best-priced offers. This has led retailers to implement AI systems to optimise the pricing of their products.
Autonomous retail planning that is self-learning and self-tuning breaks down the many silos and optimises the business decisions across the entire supply chain network, from stores to DCs to suppliers.
“Machine learning allows retailers to incorporate a variety of demand-influencing factors and relationships into their retail sales forecasts. This is enormously valuable, with weather data consisting of hundreds of different factors that can potentially impact demand.”
Kärkkäinen concluded, “Retailers need to be aware of the benefits that AI planning solutions bring as the results speak for themselves. Systems allow for the fast and successful implementation of innovations, for instance, new store formats or fulfilment models and resiliency. Retailers gain flexibility, transparency, and a competitive edge as it is quicker and easier to integrate changes.”
There’s also plenty of other AI editorial at IoT Insider’s sister publication, Electronic Specifier. And you can always add to the discussion at our comments section below or on our LinkedIn page here.