How AI can help the post-corona recovery

23 April 2020 5 min. read
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With the global economy looking set for a period of negative growth following the Covid-19 outbreak, artificial intelligence could provide firms with a vital head-start when it comes to recovering. According to BCG Gamma’s Global Leader, Sylvain Duranton, companies leveraging the technology will be well-positioned to improve their supply chains and product customisation in order to boost their profitability.

The advent of artificial intelligence (AI) has already provided organisations across the industrial spectrum with major opportunities for improving their client offerings, operations and compliance. These benefits could be about to become a major asset for firms due to the onset of the coronavirus, and the global economic turbulence it has caused. In a recent interview with technology news site The Innovator, Boston Consulting Group (BCG) AI expert Sylvain Duranton outlined how AI-powered companies may be well positioned to thrive once the Covid-19 crisis abates.

Speaking to the online outlet, Duranton explained, “BCG has been analysing downturns since the mid-1980s. During the four previous global economic downturns, 14% of companies were actually able to increase both sales growth and profit margins. AI will play a critical role in determining the winners post-Covid-19. Why is that? Everything has become extremely volatile and uncertain.”

Sylvain Duranton, Global Leader at BCG GAMMA

Markets around the world have been subject to a degree of uncertainty already over the last three years, but events such as the presidency of Donald Trump, Brexit and a productivity crisis all come with a certain number of known-unknowns. They are events which have modern historical precedents, and organisations can subsequently attempt to shield themselves from their most negative impacts – but with the added variable of a pandemic, companies must anticipate how a disease’s organic structure is going to develop, and anticipate political decisions to manage the situation, customer reactions and individual market impacts.

Duranton stated, “This requires, building scenarios rather than forecasts and making real-time decisions. Companies that already have AI tools in place will be able to move much faster and better than others to manage their channels, their products, their supply chain and their procurement process… We don’t know what the world will look like when the crisis is over but we know there will be a lot of uncertainty and a need for resilient organisations so some of the trends from the past, such as digital transformation and the adoption of AI by business, will be accelerated.”

AI optimisation

Duranton is a Senior Partner and Managing Director at BCG, and the Global Leader of BCG GAMMA, a business unit dedicated to Data Science and Advanced Analytics applied to business. He manages a team of 900 data scientists, who master multiple data analysis techniques, including data science, data engineering, optimisation and machine learning, while providing support to businesses in the field of AI.

According to the BCG Gamma boss, logistics and retail may be two of the industries where AI will be most important, following Covid-19. Focusing on supply chain management, he explained that there is now a need to build and manage supply chains in an optimal dynamic way, as the current crisis has majorly disrupted global supply chains, and moved redundancy “higher up on companies’ agendas” as a means of reducing risk and weathering the next global shock.

Duranton continued, “AI offers the potential for companies to build resilience into manufacturing operations and supply chains, while at the same time minimising cost and damage to margins. AI enables manufacturers to optimise cost in each factory through predictive maintenance and better planning. It also allows them to operate a larger number of small, efficient facilities nearer to customers rather than a few massive factories in low-wage nations by deploying advanced manufacturing technologies such as 3D printing and autonomous robots that require few workers.”

Supply chain disruption is only part of the problem many businesses face, however. Many – particularly in retail, or the luxury goods market – are facing notable downturns in demand, and without finding new ways to reach potential customers to entice them into purchasing, the situation does not look good for many in the sector. Duranton asserted that “thanks to its ability to analyse data from myriad sources,” though, AI has unparalleled potential to discover emerging trends and identify changes in consumer preferences, helping early adopters to weather the current storm.

“AI will be at the core of personalised products that can help to improve customer engagement and sales during the emergency and acceleration of the remote economy. Even in a human-centered industry like fashion, some companies are augmenting their business intelligence capabilities with AI to amplify weak signals and detect trends early on, such as which colours are likely to be popular in the coming season.”

Summarising the cross-roads most businesses are fast approaching, Duranton concluded, “The current crisis and its aftermath should motivate companies to adjust their business models to the new reality. Winners will reinvent themselves by putting software, data, and AI at the core of their organisations. Such a transformation requires that AI be regarded as central to a business model that differentiates a company and defines how it creates value as well as its operating model.”