While the meteoric rise of artificial intelligence (AI) may provoke dystopian fears of humans losing their jobs to robots, the reality has been much tamer. Essentially, AI is a tool like the Internet or a calculator that can be more advanced. Astute business owners use AI to foster innovation, unlock new revenue streams, and stay competitive in the digital age.
Previously, we introduced the top five areas where AI is streamlining processes and aiding business growth. In this article, the first in our series of deep dives into each area, we’ll discuss how businesses can leverage AI to improve productivity.
Understanding AI in the Business Context
AI is a technology that leverages data and advanced algorithms to automate tasks, analyze vast datasets, and make informed decisions. AI has empowered businesses to become more efficient, reduce operational costs, and deliver personalized customer experiences. From chatbots providing instant customer support to predictive analytics optimizing supply chains, AI can be a game-changer when businesses use it properly.
AI automates tasks using algorithms and data to perform repetitive actions, reducing human labor and the likelihood of errors. It enhances business processes by analyzing large datasets, generating insights, improving decision-making, and predicting trends. This simplifies operations, increases efficiency, and fosters innovation, giving companies a competitive edge in today’s data-driven world.
Why Productivity Matters to Business Owners
As a small-to-midsize business owner, you’re already familiar with the importance of time and resource management. Operating with limited budgets and personnel—at least compared to large corporations—makes efficient resource allocation paramount. You must ensure optimal capital, human resources, and materials utilization to improve productivity and profitability.
Effective time management helps prioritize tasks, meet deadlines, and respond swiftly to market changes, enabling your business to stay competitive and grow in a dynamic marketplace. Even minor, incremental improvements in productivity can lead to significant cost and time savings. With the help of AI, these improvements can be monumental.
Revolutionizing Automation through AI
AI is revolutionizing businesses across nearly every industry. For instance, in manufacturing, AI-driven robotic process automation (RPA) streamlines production lines, ensuring precision and minimizing downtime. AI algorithms automate data analysis and fraud detection in finance, saving countless hours and resources. This automation extends to inventory management, where AI-driven demand forecasting optimizes stock levels, preventing overstock or stockouts, ultimately leading to significant cost reductions.
Examples of How AI Aids Business Productivity
Here’s a closer look at a few ways automating with AI is helping businesses improve productivity:
A chatbot is an AI application that uses natural language processing to interact with users through text or speech. It interprets user input, processes it, and forms relevant responses or actions. Chatbots can answer questions, provide information, or perform tasks – like generating a return label for a warranty replacement – without additional human input.
#2 Inventory and Supply Chain Management
By predicting patterns in product demand, AI helps optimize inventory levels, so you’re only stocking what you need. This can keep production and storage costs low, which helps your bottom line. By automating repetitive tasks, such as order processing, AI can prevent the costly errors that often happen with human labor.
AI-powered analytics provide real-time visibility into supply chain operations. For example, say you have a regional manufacturing business with ten retail locations. AI can analyze materials availability, historical sales data, and even weather patterns to ensure you have what you need when and where you need it. AI can also monitor and alert you to disruptions in the supply chain, such as natural disasters and geopolitical events. With this information, you can make proactive decisions to maintain business as usual.
#3 Bookkeeping and Financial Management
Perhaps not surprisingly, AI’s superior accuracy with repetitive calculations is immensely beneficial for bookkeeping and other aspects of financial management. AI-powered accounting software, like QuickBooks and Xero, can automatically categorize expenses, reconcile transactions, and generate financial reports. Having AI on your side can help ensure adherence to IRS and other regulations, reducing the likelihood of fines, audits, and additional labor to deal with these disruptions.
Besides bookkeeping, AI can be the cornerstone of your business’s broader financial operations. For example, credit scoring models that use AI algorithms assess the creditworthiness of customers and suppliers more accurately, which can help companies avoid potential bad debts that negatively impact their bottom line. AI can also analyze historical financial data to forecast future cash flows and identify trends that may impact financial performance. This predictive capability allows businesses to proactively manage their finances and make strategic decisions, such as when to invest in growth or cut costs.
#5 HR Processes
AI helps human resources by enhancing candidate selection and improving employee engagement. In recruitment, AI screens resumes and applications to select the candidates with the most suitable skill sets, education, and experience. More advanced applications include IBM’s Watson Recruitment platform, which uses natural language processing and personality analysis to assess an applicant’s suitability for a role. This reduces the need for a human HR professional to do these time-consuming tasks.
AI can also ensure the best talent stays on the roster by automating employee engagement and retention efforts. AI-powered systems can analyze employee sentiment through surveys, feedback, and social media to identify potential issues and workplace improvement opportunities. For instance, Glint, an AI-based platform, helps organizations gather real-time employee feedback and provides actionable insights to enhance satisfaction and productivity. Overall, AI might not be human, but it’s a valuable resource in HR.
AI assists productivity in marketing by digesting large amounts of customer data and suggesting personalized approaches at scale. For instance, Google’s machine learning algorithms can process user search queries to understand intent and display more relevant ads, significantly impacting click-through and conversion rates in online advertising.
Another way AI assists in marketing is through predictive analytics, which helps identify trends and patterns in consumer behavior, leading to better engagement and, ultimately, more sales. In e-commerce, AI-driven product recommendations on platforms like Amazon and Shopify increase sales by suggesting products tailored to each user’s preferences and browsing history.
Financial Benefits of AI-Driven Productivity
Taking the above into account, the main financial benefits AI provides businesses fall into these general categories:
- Enhanced efficiency: AI provides real-time insights to aid decision-making, reduces downtime through predictive maintenance, and improves supply chain management.
- Cost savings: AI-driven automation reduces operational expenses by streamlining repetitive tasks, minimizing costs arising from human error, and optimizing resource allocation.
- Revenue growth: AI enables personalized marketing, which improves customer engagement and retention. The technology can also identify new business opportunities by analyzing your company’s data and market conditions.
Best Practices for Implementing AI for Productivity
Want to give AI a try? Here are a few tips for incorporating AI into your business.
- Start small and focus on specific, high-impact areas: Focusing on small-scale interventions, such as introducing chatbots for customer service, allows you to gain experience and demonstrate the value of AI within your organization without overwhelming your resources or disrupting existing workflows.
- Invest in the right AI tools and platforms tailored for small businesses: There is a growing market for AI tools, such as Chatfuel, Zapier, and Mailchimp, that cater to smaller enterprises. These tools are often cost-effective and scalable, with user-friendly interfaces that make it easier for your team to leverage AI with minimal cost and time commitments.
- Learn continuously and adapt: Invest in training programs to upskill your workforce and ensure they can effectively use AI tools. As your business and reliance on AI grows, you’ll want to regularly update your AI models to stay aligned with changing needs and evolving technology.
- Ensure data privacy and address ethical concerns: Maintaining your customers’ trust is also essential for growth, so be transparent about your use of AI (such as what data your website collects, how you’re protecting privacy, and so on). If you use AI for customer-impacting decisions, such as assessing creditworthiness, be open about that. And respond decisively to minimize the negative impact in case of a breach or other security issue.
Harnessing AI to automate basic tasks and leverage complex data can increase productivity, saving your company time and money in customer service, inventory and supply chain management, financial management, HR, and marketing.
Next up in the series, we’ll look at how AI transforms customer service – besides just chatbots!
If you’re looking for a formal assessment of your business and its value, Viking can help. We’ll analyze all aspects of your business and provide actionable insights into how you can maximize your company’s value, such as how you can leverage AI for your unique needs. Contact us today for a no-cost, confidential consultation.