Wendy’s menu board. Ben & Jerry’s grocery store freezer. Abercrombie Marketing. Many pillars of the American customer experience are increasingly powered by artificial intelligence.
The question is whether this technology actually makes companies more efficient.
Rapidly increasing productivity is a dream for both businesses and economic policy makers. If output per hour remains stable, companies must either sacrifice profits or raise prices to pay for higher wages or investment projects. But if a company finds a way to increase output per labor hour, it means it can maintain or grow profits even as it pays and invests more. Economies experiencing productivity booms can experience rapid wage increases and rapid growth without much risk of rapid inflation.
But many economists and officials seem to question whether AI, especially generative AI, which is still in its infancy, is already pervasive enough to show up in productivity data.
Federal Reserve Chairman Jerome H. Powell recently suggested that AI “has the potential to enhance” productivity growth, but “probably not in the short term.” New York Fed President John C. Williams has made similar statements, specifically citing research by Northwestern University economist Robert Gordon.
Gordon argues that while recent new technologies are important, they probably do not have the transformative power to drive lasting productivity gains.
“The enthusiasm for large-scale language models and ChatGPT has gone a little too far,” he said in an interview.
The last real increase in productivity occurred in the 1990s, when computers themselves became much more efficient to manufacture, and at the same time computers themselves made everything else more efficient, enabling productivity gains across departments. became. He thinks the profit margins may not be as wide today.
Other economists are more optimistic. Stanford University’s Erik Brynjolfsson bet Gordon $400 that productivity would increase dramatically over the next 10 years. Part of his optimism is based on his AI. He experimented with AI in a large call center, specifically helping less experienced employees. He also co-founded a company that aims to teach businesses how to take advantage of this technology.
Many companies seem to be in Brynjolfsson’s camp, hoping that this shiny new tool will revolutionize the workplace. From creating marketing emails, companies Assist with pricing and answer employee HR and legal questions.
Here are some of the areas where companies say the latest AI technologies are being used in ways that can impact productivity, from interviews, earnings calls, and financial reports. .
Have a tedious task? There’s an AI to make it happen.
Employees spend a lot of time resolving HR-related questions. Companies have been investing in generative AI to help answer these questions quickly.
Walmart, the largest U.S. retailer with 1.6 million employees, has a section in its employee app called “My Assistant,” which is supported by generative AI. This feature uses technology to quickly answer questions such as “Do you have dental treatment?” ”, summarize meeting notes and assist in writing job descriptions.
Walmart rolled out the technology to its U.S. employees last year.
The retailer makes it clear that the tool is aimed at increasing productivity. Donna Morris, Walmart’s chief human resources officer, said in an interview last year that one of her goals is to eliminate some of the day-to-day tasks so employees can focus on more impactful work. This is expected to be a “significant productivity boost” for the company, she said.
Algorithms are trying to sell you things.
Macy’s CEO Tony Spring said the department store chain is experimenting with AI to customize marketing. The company uses generative AI to create email elements, and uses the technology to add product descriptions online and to display images of sales clothing and other products on new backgrounds. I’m looking for a way to duplicate it.
“It’s certainly been used as a workload reduction tool for some of my colleagues,” Spring said in an interview.
Abercrombie & Fitch uses generative AI to help design clothing and create descriptions for its website and app. Designers use Midjourney, an AI graphics program, to generate images when brainstorming clothing ideas. Abercrombie marketing employees also use generative AI to write product description blurbs. (The employee will edit the copy later.)
Sameer Desai, chief digital officer at Abercrombie & Fitch, said the technology could speed up what would otherwise be a painstaking process, given that Abercrombie and its brands can put hundreds of new products on its website per week. He said it will help improve.
“I think there’s a widespread trust and belief at this point that these are things that improve productivity and increase efficiency,” Desai said, adding that it’s hard to quantify how much time and money is saved. He pointed out that it is difficult to do so. “I think it’s going to show in how much work certain teams can get done compared to past years.”
AI goes well with burgers and ice cream.
Some companies hope to use the latest AI technology to match prices to demand, similar to how Uber prices its cars based on the number of people who want to take a ride.
For example, Wendy’s has floated the idea of using AI to identify later times of the day and discount the prices of menu items on its digital boards.
The technology could also help with inventory management. Ben & Jerry’s has installed AI-powered cameras in grocery store freezers that can alert the company when Cherry Garcia or Chunky His Monkey’s pints are running low. The cameras sporadically capture images of the freezer shelves, and the technology assesses how much is left and sends alerts to Ben & Jerry’s parent company and its distributors.
“The software also helps us identify what’s about to run out and plan the most efficient route for trucks to replenish inventory,” Katherine Reynolds, a spokeswoman for Ben & Jerry’s parent company Unilever, said in a statement. ” he said.
The AI technology is installed in 8,000 freezers, and the company said it plans to significantly increase that number this year. Freezers equipped with AI technology increased sales by an average of 13% as they restocked fresh ice cream, especially the most in-demand flavors, Reynolds said.
AI is getting into the weeds.
Farm equipment manufacturer Deere and Company is using cameras and AI together to improve its herbicide sprayers. This device specifically recognizes and targets weeds, allowing for more precise use of chemicals. The technology was first introduced in 2022, and the company estimates it covered 100 million acres and saved 8 million gallons of herbicide last year.
The company’s CEO, John C. May II, said at a press conference in February that the technology “allows customers to reduce herbicide use, reduce costs and minimize impact on crops and land.” It can be kept to a minimum.”
Are these game-changing improvements?
Skepticism about AI’s potential to create significant change is largely based on the fact that many applications of AI mimic what software can already do. There are obvious improvements, but they’re not necessarily revolutionary.
But while it may take time for companies to fully take advantage of AI tools, the fact that their range of applications could be so wide has led some economists to believe that the new technology could help boost productivity. I’m optimistic about what that will mean.
Vanguard analysts believe AI has the potential to be “transformative” to the U.S. economy in the late 2020s, said Joseph Davis, the firm’s global chief economist. He said the technology could save workers meaningful time in about 80% of occupations, perhaps 20%.
“It’s not showing up in the data yet,” he said, explaining that he believes the recent recovery in productivity is a recovery from a sharp decline during the pandemic. “The good news is that another wave is coming.”
