Wholesale Machine Transformation

“Your generation thinks it invented protest marching, long hair, free love, and heavy metal”. Mr Wilkin’s opening salvo and first reaction to the news that I have decided to drop the viola in favour of the electric guitar. He cranks it up another notch. “Black Sabbath and Led Zeppelin? Light weights. Tchaikovsky would blow them away. This is the genius who wrote cannon fire into the score of the 1812 overture. Tchaikovsky the giant who created panoramic soundscapes for 100-piece orchestras. Why so big? Power, volume, and attitude. Imagine what he could have achieved with a stack of Marshall amps and a million gigawatts of electricity behind him”. Mr Wilkins is my music teacher. ?He is ex-military with honours – D-Day landings. He’s passionate, he’s formidable and because it is 1970, he can assert his considerable physical presence. You don’t “disappoint” him.

I am sure like me you’ve done this “greatest” thing at gatherings. Greatest ever: movie, female artist, album of all time, author, James Bond (Sean Connery), eighties tune, footballer and so on. The greatest ever discovery or invention? ?Maybe the steam engine for effectively starting the industrial revolution and spawning mass transport. The combustion engine or crude oil production, petroleum, and plastics technology. Vaccines and immunology enabling control and eradication of debilitating diseases such as smallpox and polio. Enabled by germ theory which initiated diagnostic microbiology in medicine. Not possible without optical lens expertise giving rise to glasses, telescopes, and microscopes. The internet for totally transforming the way we live our lives today. Personal computers, smart phones, and broadband. But the thought of metallicising and plugging in Tchaikovsky with synths, guitars and amps is just too exciting. Anyone living in the late nineteenth century would be aware of electricity, but most would be amazed at how we rely on it today. Electricity is my choice as the most consequential discovery of all time.

Until now - Frankenstein’s progeny are arriving. Artificial Intelligence (AI). Regulate it, politicise it, promote it, oppose it but you won’t deny it. Will it prove to be as impactful as electricity? Elon Musk has no doubt. “We are seeing the most disruptive force in history”. ?Ian Cowie (The Sunday Times) says that AI today is what steel was in 1856 when Sir Henry Bessemer invented a way to make steel stronger, more cheaply and quickly than previously possible. Steel was central to the production of railways, cars, planes, and skyscrapers. Cowie reckons that AI is the “Bessemer” moment for the “Famous Five” tech giants: Alphabet, Apple, Meta Platforms, Microsoft and You Tube. Danny Forston (The Sunday Times) reckons that the release of ChatGPT is the “big bang” moment. Capable of conversations, writing code, music, poetry, realistic images and producing multilingual swathes of copy. He reports that OpenAI is on track to bring in $2 billion in annual sales in just fourteen months after launching ChatGPT. As the potential of AI becomes better understood there are serious concerns about the threat it poses. The International Monetary Fund (IMF) predicts that AI will have the ability to perform key tasks currently executed by humans thus lowering demand for labour and eradicating millions of jobs. Elon Musk is more succinct. “Tech will make paid work redundant”. There are also huge AI concerns around deep fake, cloning, copyright infringements, plagiarism, and intellectual property theft. Hence the introduction of the new Institute of AI Safety and the inaugural safety summit in November 2023.

We have all experienced the limitations of the current generation of bots on service provider websites. GPT-4 takes this machine engagement to a far higher level. For certain AI will enter the wholesale sector. ?AI will become integral across operations for order placement, file management, customer file optimisation, delivery efficiencies, payment, and credit control. Imagine machine driven telesales where the difference between a human and machine is indiscernible. Wholesaler and supplier interfaces where AI offers both parties significant efficiencies. The heavy lifting of promotional scheduling, order placement, file updates will be undertaken by machines. It is not inconceivable that negotiations and joint business planning be streamlined by the deployment of AI machines. Machine-led deep analysis of product sales performance will provide management with the tools to objectively appraise SKU performance and space efficiency.

Wholesalers have a wealth of valuable customer data on their systems. To date relatively under-exploited. AI will enable wholesalers to gain a deep understanding of customer behaviours, patterns, trends, and propensities highlighting the opportunities in the customer file. Identifying the important customers and those with the highest potential, offering true profit visibility and the insights for sales and margin improvements. AI machines will recommend marketing strategies to properly unlock the value in the customer base. ?AI marketing will provide the intelligence to determine which media work the best and at which times. Machines will supply the pre and post promotional analysis facilitating activation decisions and signposting the pathways to the best use of product investment.

At the checkouts AI will take scanning and front-end service to a higher level. Expect AI-driven machines to significantly speed up throughput: scanning, invoicing, and payment. Given the ability to search through records at speed, AI will seriously improve outstanding and overdue payments. Customer delivery efficiency will be enhanced by the application of AI: route planning, vehicle loading, product selection and profit per vehicle and customer.

Launching new products (NPD) is always high risk and the failure rate is high. Brand owners are already using AI-powered machines to trawl the social media sites for trends pertaining to consumer lifestyle preferences, tastes, and product formulations to decide in which sectors to invest and build out on NPD. The likelihood of success is increased and the product launch de-risked. ?An evidence case is built to persuade retailers and wholesalers to commit early to NPD. AI offers manufacturers the cues for the advertising and marketing campaigns to ensure the best chances of success.

All service companies including wholesalers need to understand that AI has the potential to shift the balance of power between sellers and buyers in favour of the buyers. It is quite likely that meaningful price comparisons will be available on open source in the very near future. ?And through the ChatGPT app it is already possible to get service sector comparisons across a range of variables. This effectively neutralises price as a competitive advantage and places the emphasis on other loyalty and retention tools with service being the key component.

As Ian Cowie says: “The digital revolution (AI) will create winners and losers destroying millions of old jobs but providing millions of new jobs and better services just like Bessemer steel did”. AI is already writing stories, poetry, and music. I am not sure whether Mr Wilkins or Tchaikovsky would have approved, but it is going to happen in wholesale and soon.

A version of this article was first published in the March 2024 issue of Better Wholesaling.

? David Gilroy 22/04/24