AI has penetrated absolutely all areas of our private and business lives. Experiencing the benefits, companies are ready to spend increasingly more money on technology — a total of 154 billion dollars for 2023. Leading industries include banking, retail, professional services, and manufacturing. While some are investing, others are asking a natural question: How will AI change the labor market?
According to an IBM report, 77% of managers note that the impact of generative AI is already felt in entry-level positions. However, the consequences will not be as catastrophic as commonly believed. 87% of executives predict that employees will be augmented by AI rather than replaced. This will result in 40% of the workforce needing retraining.
McKinsey forecasts that by 2030, AI will automate activities accounting for up to 30% of working hours, leading to 12 million job changes. First, this applies to office maintenance, production work, food services, customer support, and sales. At the same time, the number of vacancies in education, health care, transportation, construction, and STEM (Science, Technology, Engineering, and Maths) is increasing.
What advantages does AI bring and what workforce problems does it help to solve? How to efficiently use AI in operations management? How are artificial intelligence and business management connected? In this article, we will answer all these questions.
Why AI Should Replace Humans in Management
The human factor can negatively impact management effectiveness. By nature, people are biased and subjective. That’s why they might ignore certain facts or discriminate against certain races, age groups, or genders. Emotional reactions often overshadow logical arguments, leading to impulsive decision-making.
You should not forget that the human brain cannot work concentratedly for more than 3-4 hours, and every distraction to other tasks reduces productivity. Stress, lack of quality rest, and personal circumstances also affect work efficiency. It is typical for people to get sick, go on vacation, etc.
The burnout of both managers and ordinary employees deserves special attention. In addition to the above, routine and monotonous work provokes exhaustion.
Can AI capture these challenges facing companies? Definitely.
Task Automation
Every company faces a dozen routine operations that can be automated:
- Administrative tasks
- Data entry and analysis
- Audit, documentation, and reporting
- Customer service and technical support
- Inventory management and stock replenishment
- Report creation
Doing them constantly demotivates your staff, causing burnout and turnover. So why not automate these tasks and reallocate employees to more responsible and creative ones? This is what robotic process automation (RPA) does. This technology lets you optimize repetitive operations using defined rules. Believe us, your employees will be happy to eliminate this part of their work.
Natural language processing (NLP) easily analyzes text and sentiment, as well as makes fast translations. This technology will be helpful to chatbots and virtual assistants as the system can understand the text and generate appropriate answers.
Just imagine how much the quality of your customer support will increase without waiting long for a response. Of course, it should be used for typical requests. Meanwhile, human managers could take care of more complex ones.
24/7 Availability
We have already discussed that human employees have a cognitive limit and a tendency to get tired or sick. AI systems do not have similar problems.
They can provide 24/7 support to customers, solving their problems and answering their queries. As a result, you get satisfied and loyal clients. On the other hand, AI systems continuously assist employees and help with tasks during working and non-working hours. This positively affects productivity and allows prompt resolution of force majeure situations.
By the way, let’s talk about unforeseen circumstances. AI constantly monitors key indicators and, therefore, immediately signals anomalies and problems. Early detection of the problem and its mitigation allows you to make timely decisions and reduce business risks if not completely minimize them.
Cost-Efficiency
What business wants to avoid optimizing its costs? AI becomes a reliable assistant in this task. Of course, implementing the technology requires resources, but this solution will save you a lot of money in the long run.
First, you reduce labor expenses. Automated tasks require fewer human resources and, thus, less wages, paid vacations, insurance, and sick leave. Second, you improve your work productivity. Automated tasks are completed faster, continuously, and without errors. In addition, you make decisions based on analyzing large data sets, enhancing the overall business efficiency and profitability.
Improved Decision Making
Are you sure that you are operating with accurate data when making decisions? AI systems will easily analyze your sales and the productivity of departments, individual employees, or competitors. You won’t be able to process large volumes of data from CRM and ERP systems, social networks, or open market reports as quickly on your own.
AI effectively detects correlations and trends, assisting your data analyst. However, the human specialist perfectly understands the context of the situation and the market. Together, they will accurately predict future events and trends. Based on the results, you can ensure sufficient inventory levels, improve the product, or optimize a pricing policy.
Competitive Advantage
AI knows how to beat your competitors and win the consumer. Algorithms will help you understand the strengths and weaknesses of the whole business, individual departments, and employees. Use it to predict trends, forecast sales, and optimize your inventory and resources.
Understanding trends in consumer preferences can give you ideas on how to improve your existing product, making it more competitive. It can also push you to create something completely new and innovative that your niche has not seen before.
Adaptability
Compared to humans, who often react negatively to process changes, AI learns new things easily. How does this happen? Models use data and experience to refine parameters and structures and provide accurate results. Thus, systems adjust their behavior based on new requirements, which is especially valuable in changing circumstances.
How AI Can Improve Operations Management
After familiarizing ourselves with the advantages, we can discuss typical cases of using artificial intelligence in operations management.
Demand Forecasting
Demand forecasting is the foundation for industries such as retail, supply chain, or manufacturing. It starts with collecting historical data about demand, sales, advertising campaigns, economic factors, public sentiment, etc. Where? From the company’s internal databases and open external sources for special marketing research.
Next, analyzing the data to reveal dependencies and correlations between factors is important. The AI model creates forecasts for a given period, which are evaluated over time. This allows you to adjust the models for more accurate results.
Resource Allocation
Are you able to effectively reallocate resources? AI does, so it can be a handy tool. By forecasting the demand for products and services, you will optimize the allocation of resources — and prepare for a seasonal surge or, conversely, scale down. Thus, you will avoid excess or shortage of goods in the warehouse.
Or you plan a project from scratch and want to do it optimally. Allow AI to analyze the resources needed at different project stages and wisely redistribute them. Competent allocation helps avoid budget overruns or delays.
Algorithms also analyze your employees’ skills and experience to effectively redistribute tasks between them. That means you optimize your workforce and increase its efficiency.
Supply Chain Optimization
The supply chain is a complex network with many stakeholders and processes. Bringing them all to a common denominator and considering all the variables can be challenging. But not for AI in operational management, which can analyze large amounts of data.
By forecasting demand, you improve inventory, supply, and production management strategies. For example, you can configure the AI system to automatically order inventory when its levels fall below a certain threshold. Or competently distribute stocks between various warehouses according to demand.
What about production planning? With AI, you consider resource availability and order volumes to create optimal production schedules and use equipment efficiently. Thus, you will forget about delays or downtime.
Logistics should also be optimized. We are talking about the best delivery routes and the selection of efficient vehicles, taking into account the weight, volume, and other cargo characteristics.
Changes in prices, regulatory norms, or logistics schedules will not have catastrophic consequences if you develop strategies to minimize risks in time. AI will analyze risk factors, letting you prepare.
Quality Control
The high quality of your products and services is the key to your company’s success. It would be a shame to lose consumers’ love due to a functional or visual defect. AI will help quickly detect such issues and ensure compliance with quality standards. Let’s discuss how it works.
Computer vision recognizes different types of defects with great accuracy through the analysis of visual images. Therefore, you automatically detect cracks, scratches, and deviations from dimensions or weight, preventing defective products from reaching the consumer.
Feedback, test results, and failure rates are important to quality assurance. AI identifies trends and patterns so you can improve your manufacturing processes. If your models also predict failures, you can prevent problems by taking appropriate measures.
Reliable Customer Service
How does AI improve your customer service? First, you can personalize the recommendations. Algorithms analyze data about preferences and behavior, as well as purchase history, to suggest relevant goods and services. In 2024, it is time to stop mass mailings “for everyone” and provide individual advice.
Automated query processing is also an effective tool. You can use chatbots and intelligent assistants to quickly solve issues and answer questions about products and order status, increasing customer satisfaction.
AI allows you to predict trends so you can always improve your product and retain customers. Also, remember to respond to feedback in a timely manner to offer quick solutions and compensation for inconvenience.
At the same time, algorithms allow for the accurate prediction of delivery times and optimized routes for better service.
Dynamic Pricing
Forget the traditional approach to pricing that ignores real-time consumer behavior and market conditions. With AI, companies monitor competitors’ strategies — their pricing, positioning, and promotions — to maintain high demand and profitability.
Analyzing seasonal trends allows you to increase prices during periods of high demand to maximize revenue. During periods of low demand, you should lower prices to avoid excess inventory and encourage sales. Price regulation also helps to attract price-sensitive customers.
Personalizing prices based on customer characteristics and purchasing behavior is a good idea. Prepare discounts, promotions, and other incentives to maintain loyalty and increase your company’s income.
Predictive Maintenance
How to predict possible maintenance costs and understand when it is time to repair the equipment? AI makes it very easy.
Advanced models analyze the equipment’s condition and characteristics, as well as the history of repairs. This way, they predict future maintenance costs, allowing you to plan and allocate financial resources more effectively.
Today, it is also possible to determine the optimal time for maintenance. To do this, you should analyze the machine’s condition and workload (temperature, vibrations, etc.). With a reasonable maintenance schedule, you avoid costs due to breakdowns and equipment downtime.
How AI Can Boost Business Management Efficiency
Which processes will benefit the most from implementing AI in business management? Let’s figure it out.
Customer Support
No matter what products or services you sell, your customers will always need support. But helping buyers can take a lot of time and effort. This is where chatbots with AI come to the rescue. They work nonstop, never get tired, and are always in touch. In addition, they can serve as an automated assistant for self-service.
Another way is to use artificial intelligence in business management as an assistant for help desk operators. The system analyzes phone conversations and provides the operators with the necessary information based on the communication. Your operators have everything at their fingertips and do not have to search for data or enter queries manually. As a result, you meet customers’ needs more quickly and efficiently.
Marketing and Sales
Are you confident your marketers are using data effectively? If your company is mature, you probably access a large amount of data that still remains unused. But you can fix this by implementing AI solutions.
One of the first steps is using AI to improve personalization. Today’s consumers expect their interactions with companies to be as personalized as possible. Yet, marketers and salespeople often lack time to do it manually. This is where AI can help.
At the same time, management AI systems analyze data about leads, sales, and other information collected from various platforms. For example, you can learn the paths other customers have taken to purchase and offer tailored content that will increase the likelihood of a successful transaction — all this without direct human intervention.
HR Operations
When looking for new employees for your company, you want the process to be as efficient and seamless as possible. You also want to make sure you’re choosing people who are a real fit for your team and will bring success. This is where AI and machine learning come in to help you find the right people for the right jobs. And this can happen even before you announce the next vacancies.
For example, if a company is looking for new managers, the system highlights the qualities and characteristics of its most successful managers. These characteristics can then be used to calculate the candidate’s performance. In addition, they can serve as a basis for training existing managers to develop as professionals better.
It speeds up recruitment since the system suggests more accurate interview questions and helps train existing employees.
Payroll and Invoice Fulfillment
AI can optimize many routine operations and administrative duties in the back office. One of the first steps is automating payroll. It is possible to calculate salaries manually for a small number of employees, but as the team grows, this becomes impractical. An automated system can do all this work for you, ensuring records are accurate and available at all times.
Another useful process to optimize is the processing of supplier invoices. Manual processing can lead to missed discrepancies or even fraud. AI systems detect problems or duplicates, helping you avoid errors and save money. Optimizing payments and eliminating errors keeps suppliers and your company happy.
AI in Management: Transformative Examples of Success
As a developer of modern custom solutions, S-PRO has considerable experience delivering AI-powered systems. We want to share how our technology has changed the compliance certification process.
Compliance Aspekte is a platform that helps companies manage compliance with requirements like GDPR, ISO 27001, IT-Grundschutz, etc. It organizes documentation, indicates interaction between assets, describes risks, and provides an opportunity to integrate documentation with policies and processes into the system.
Previously, Compliance Aspekte only used rules-based algorithms and a basic chatbot for support. It is now implementing an advanced AI co-pilot system. This pilot not only answers questions but also interacts with platform objects, manages user tasks, and provides context-sensitive guidance for compliance certification.
The platform significantly reduces manual work and dependence on staff, making the process more efficient. It was released in September 2023 as a SaaS product and has already attracted the attention of large companies in various sectors, such as telecommunications, engineering, manufacturing, and banking.
Conclusion
Today, AI is improving the work of all business departments — from recruiting and marketing to customer support and invoicing. You can forecast demand, enhance product quality, reduce costs, and react more quickly to market changes. At the same time, you should not think the technology will threaten your staff, as they can deal with more strategically important tasks.
Integrating AI into operations management is a key step for today’s businesses that strive for success. Want to discuss your AI and management ideas and get a detailed project estimate? Contact our specialists.
