Process improvement — not cost savings — drive AI adoption

Dive Brief:

Rather than for cost savings, most business leaders see artificial intelligence (AI) adding value to their business processes and consumer engagement, according to a report released by PA Consulting and the Consumer Goods Forum.
In supply chain operations, technology will have some of the greatest impact on drone deliveries, automated warehouse picking and driverless vehicles.
To implement AI, the report recommends making changes in an agile way and constantly evolving strategy, as well as adapting the workforce to work with, not against, machines.

Dive Insight:

Labor advocates have decried automation and robotics, arguing they take away jobs, especially in vulnerable developing economies, and are used with the main goal of reducing labor costs.

But the report from PA Consulting and the Consumer Goods Forum shows organizations' priorities with AI diverge from just labor cost reduction.

In a study from Source Global Research, 60% of leaders said they plan to use AI to improve processes, and 57% said AI will change how they engage with consumers. In comparison, only 40% said they'll use AI to "cut costs by reducing the number of people we need."

Shefali Kapadia / Supply Chain Dive, data from Source Global Research

"It’s clear that cutting costs isn't the primary driver for most organisations that are considering AI," the report said.

While costs may not be top of mind, they're still a consideration. Fortunately for businesses, technology costs are dropping, creating a favorable climate for AI and automation.

In a fast consumer-driven environment, automation may not be just an added bonus, but rather a necessity to avoid falling behind the curve.

"The efficiency of current supply chains is limited by the human component," the report said. "Behind the hype, the adoption of AI and Robotics automation is an inevitable evolution you can’t ignore."