Three Ways Having An AI-Powered ERP Can Help Your Retail Business Mitigate Inflation

By: Jerry Abiog, Co-founder and CEO at Standard Insights

ERP (Enterprise Resource Planning) and AI have a rich history that dates back to the early 1960s. Initially known as MRP (Material Requirements Planning), ERPs were complex, expensive, and space-consuming systems primarily used by large enterprises to manage inventory production. During the same era, the development of the AI concept took its first steps in a Dartmouth workshop, aiming to replicate human intelligence in machines. Interestingly, both the creators of the ERP and AI have ties to IBM.

Continued Evolution of ERP And AI
All technologies get better, or they die (like the Blackberry). By the 1990s, Gartner coined the phrase ERP as it had applications beyond manufacturing to help improve efficiencies. The ERP then and now helps a company unify its business processes. At its core, it manages sales and purchase orders and any related financial transactions – invoices customers, tracks shipment of goods, and handles inventory for your retail business – all to make your business run smoothly and profitably.

After hitting a growth spurt, the fascination with AI dipped in the nineties with the “AI Winter,” when the appetite for it wasn’t there. Compute power was expensive. Much of the data resided on-site. It wasn’t easy to access and wasn’t commercially viable. Many companies lost interest when the hype failed to deliver.

Fast forward to now, ERP adoption went into hyperdrive when these systems transitioned from on-premise to the cloud. This shift meant small and midsize businesses, typically north of 5M in annual revenue, could take advantage of an ERP’s capabilities without purchasing or maintaining expensive hardware equipment and pay IT staff to run these behemoth applications. Secondly, the growth of other cloud-based software applications in HR, eCommerce, customer relationship management, supply chain, and marketing meant that there were more pieces of the puzzle to connect in a company’s ecosystem that would generate vast amounts of data.

In the AI world, adoption rates were increasing. This technology was already embedded in our favorite applications – Amazon and Netflix products, movie recommendations, Tesla’s self-driving features, and Alexa, most everyone’s favorite home assistant. Most didn’t know that this was AI operating behind the scenes until the rise of ChaGPT in late 2022. It was only at this time that the predictive power of AI became known to everyone, opening up its acceptance in business.

Why Is An AI-Powered ERP A Game-Changer for Your Business?
The retail and hospitality landscape is challenging. Many continue to suffer from the horrific effects of inflation, high interest rates, and labor shortages. Economic data indicate that this problem isn’t going away anytime soon. With no other options, astute businesses invest in new technologies—like an ERP if their processes are manual or they are looking to upgrade their current system—to help generate revenue, improve margins, and mitigate costs.

In addition, these businesses are awash in data from all their cloud-based tools that can be weaponized to their benefit. AI thrives on data and makes everything smarter to give your company a competitive edge. By cleaning and running their first-party data through the proper machine learning algorithms, AI can help:

  • Forecast inventory down to the SKU level using time series algorithms to help prevent overstock (costs money) and understock (loose money), often helping reduce dead stock expense by 20%
  • Create documents using NLP (Natural Language Processing) and LLM (Learning Language Model) algorithms to create sales orders and invoices automatically, leading to labor savings of 30.2%
  • Improve sales by 7.8% and increase average order value by 9.2% by predicting what each customer is likely to purchase using pattern-matching algorithms

Imagine the savings and additional revenue your retail or hospitality business can generate by investing in an AI-powered ERP.

It’s Not For The Faint Of Heart
Going on an ERP and AI journey isn’t easy. You cannot ChatGPT your way through it. You’ll have to study the pros and cons of the process and see if it’s a good fit for your organization. ERP implementation and integration is a long, winding road with many complexities, including cleaning and getting the right data in place before AI can do its job.

If you decide to proceed, an ERP and AI investment could run into the six figures. Ensure your vendor has the knowledge and capabilities to deliver beyond ChatGPT and mainstream media AI-hype talking points. Also, ask if they partner with any top-tier universities to make certain that they are up to date on the latest machine learning and mathematical capabilities- this can go a long way in validating how well their algorithms are working.

Ultimately, it boils down to leadership—getting executives, middle management, and front-line employees to be unified in achieving the organization’s agreed-upon goals at all levels. You’ll find that true growth comes from discomfort, as most companies do when undergoing a data-driven, automation transformation to get ahead during these arduous, inflationary times that are knocking many businesses out.

About the Author
Jerry Abiog is the CEO and co-founder of Standard Insights, the creators of an AI as a Service analytics and marketing platform. They help businesses leverage their first-party data to build their economic moat. They’ve been in business for over five years before AI was cool.

In addition, they build customized AI software solutions, such as Mary Jane Menu, for the cannabis vertical and are launching an AI-powered ERP in partnership with a client. Their software builds aren’t reliant on a ChatGPT wrapper. They’ve built everything independently, allowing their partners and resellers to earn potentially lucrative licensing agreements.