By the time you read this, Thanksgiving is behind us. Black Friday, Cyber Monday, and the “Black week” that follows is in full swing. We are headed into an unprecedented holiday season. At this point, your merchant and planning teams are crossing their fingers and hoping the choices they made 3 to 6 months ago were correct, both in product choices and buy quantities.
See, that’s the thing. Planning is perpetually a forward-looking exercise. The inventories you have on-hand now are a result of decisions you made months ago. The business of retail is very much dependent on these forward-looking plans and actions which were taken months before.
For a long time, practitioners have been trying to distill this exercise of planning down to some algorithmic scientific endeavor. With advances in machine learning (MI) and artificial intelligence (AI), we have indeed come a long way. I’m reminded of a conversation I had with the head of a large consulting organization. He revealed his thinking that advances in technology will render Planning obsolete. This is coming from a guy where a large portion of his business is coming from providing consulting services in Planning!
So is this true?
Will planning and buying teams be replaced by ML and AI?
Data from a 2017 McKinsey report projects that by 2030, up to 800 million global workers could be replaced by robots. But a recent study by the Brookings Institution suggests that this might not be a clear cut case, as it examines different jobs and their degree of exposure to AI. Either way, the fact that there will be disruption in our future of work is all but certain. As algorithms become more and more intelligent, AI and ML will allow companies to scale solutions in ways that were not previously possible. It’s not hard to see how advances in these technologies will replace jobs that are workflow-oriented with repetitive tasks.
“AI is good at tasks that involve judgment and optimization, which tend to be done by higher-skilled workers,” Michael Webb from Stanford University told CNBC Make It. “So, if you’re optimizing ads as an online marketer or a radiologist interpreting medical scans, all of these things take a long time for humans to be good at them. But when it comes to algorithms, once you have the right training data, they tend to be better than humans.”
The human advantage
For a discipline like buying and planning, the picture is not as dire as my fellow compatriot would suggest. As I’ve spoken and written numerous times previously on this, fashion is fickle. Customer sentiment and fashion trends cannot easily be algorithmized. Instead, I believe planning and buying, as job functions, need a renaissance. As a profession, we must consciously move our teams’ skills to a more value-add role and eliminate any manual tasks that can be easily automated. Focus your talents on challenges that require more creativity and human intuition, in other words, value add.
This is especially true during these unprecedented times. We are in a pandemic that’s a once in a century event. Even the most advanced AI and ML algorithms can’t predict with any degree of accuracy how your business will be 3 to 6 months from now. Machines need data, huge amounts of data to draw connections, and make forecasts. The more data you have, the more effective its forecast (in normal times). This is why forecasting basic items are so much simpler than fashion merchandise. And in times like these, all bets are off.
In a world where AI is gaining ground at breakneck speed, creativity, human interaction, collaboration, and high-level strategy, are the most valuable job functions today and in the future. Because at the end of the day, no matter how much technology or robotics a company has, we will always need humans for deep thinking and creative problem-solving. Increased automation will give you the valuable time you need to stay relevant and competitive. ML and AI can tell us what’s going on, but it can’t tell us why it’s happening. We’ll see more and more algorithms spitting out data telling us what our customers are doing, but it won’t be able to tell us what’s driving their behavior.
Modernize and Re-think
As our world becomes increasingly digital, retailers are faced with the choice to modernize or perish. It’s not enough to automate or apply a digital strategy, it’s a critical starting point. It must be coupled with a critical assessment and willingness to recognize and fix the broken processes. The good news is that these emerging technologies can finally give you the time to spend more energy on deep thinking versus doing low-value tasks like data entry.
With work automated, retailers can finally re-imagine how they work, how they interact with their customers, and how they operate with partners inside and outside their organization. And frankly, time is running out. If the pandemic doesn’t wake us up, I don’t know what will.
See also: Why innovations fail