Increasingly Sophisticated AI is Enhancing Business Operations for Distributors - Modern Distribution Management

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Increasingly Sophisticated AI is Enhancing Business Operations for Distributors

Smarter marketing and tailored customer preferences are among the benefits.

Distributors are using artificial intelligence to drive sales, improve marketing, personalize the customer’s experience and keep their assets safer. In a recent webcast, Ian Heller, president of MDM, discussed various ways businesses can benefit from evolving technology. One place to start is to develop an understanding of the four categories of AI:

  1. Internet AI: Personalization (such as knowing your preferences) and recommendation engines (e.g., if you bought this heater part, you may be interested in this correlating product);
  2. Perceptual AI: Voice ordering (such as though Siri or Alexa), and image recognition (using a picture to identify a product);
  3. Autonomous AI: Machines performing actions without input from a human operator (e.g., warehouse robots and delivery drones handling packages); and
  4. Business AI: Using data to enhance demand forecasting, fraud detection and pricing decisions. 

AI works online in part by accumulating data on previous purchases, consumer preferences and demographics. Heller explained, “The more you use the site, the better the recommendations become because you are providing a bigger data set for the AI to do calculations with, so it can arrive at better answers.” 

Through a photo taken on a smartphone or a spoken description delivered into a compatible device, AI can take customers to an online sales page to buy the right product. “This is going to be a bigger deal in the future where there’s more voice ordering because it’s very efficient,” Heller noted. “The power behind it is amazing, and the technology behind it is amazing. Consumers more and more are going to want to use it. These AI engines are getting stronger and stronger.”

AI also helps distributors efficiently use the space in their warehouses and trucks. “Warehouse robots navigate around each other and around a distribution center and figure out what size spots they need to put their load into,”Heller said. “Delivery drones need to avoid traffic, birds, chimneys and power lines. These systems combine to enable that.”

One result of all this technical efficiency is reduced labor costs. “You can imagine, if you can put a scale of volume through that process, how efficient it becomes and how accurate and reliable it becomes. AI may make a mistake occasionally, but then it learns from it and typically doesn’t make the mistake again. Over time, the productivity throughput and accuracy levels are much higher than we can do as human beings,” Heller said.

Specific Applications

To drive sales, distributors can use AI to: 

  • Create a quote on a mobile device,
  • Receive account action triggers based on sales trends and customer interactions, 
  • Tailor contact frequency to an individual customer’s needs and preferences, and
  • Cross-sell and upsell.

“Very few marketing companies — except at really big distribution corporations — do a really good job laying out marketing campaigns and doing good measurements,” Heller said. For marketing purposes, distributors can use AI to:

  • Create dynamic, customized marketing campaigns, 
  • Score and segment prospects,
  • Reduce application of discounts, and
  • Cross-sell and upsell, using purchase history, pages viewed and external factors such as weather.

Additionally, protecting valuable inventory is important to distributors. AI uses video cameras to:

  • Detect outliers in customer and employee behavior,
  • Check if employees are wearing safety gear, 
  • Identify “watchlist” customers across branches, and
  • Detect fraudulent transactions.

For example, AI might detect that the same person walked into three different company locations without making a purchase, and then send an alert to a security guard. It could also alert management when an employee conducts a transaction, such as a product return, without a customer present. 

Another application is dynamic pricing. For example, if there’s going to be a cold snap in Boston, AI might recommend distributors move more inventory to that area, expecting demand to grow. 

It also helps with facility and equipment maintenance. “You can use these systems to do better maintenance of your equipment because they can predict when things are going to fail like vending machines and HVAC systems,” Heller said.

For more on how digital technology is altering the distribution landscape, attend MDM’s upcoming Digital Distributor Summit, June 18-20 in Denver, CO. Click here to see the agenda.

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