Predicting growth with AI: The key to Hong Kong business success

October 31, 2023 08:36
Photo: Reuters

Hong Kong has been steadily advancing its AI development in data analytics for businesses. The city recognizes the transformative potential of AI and has taken proactive measures to foster its growth.

Various initiatives, such as the Hong Kong Smart City Blueprint and the establishment of dedicated innovation hubs, have been implemented to support AI research and development. Industries such as finance, logistics, and healthcare are leveraging AI applications to optimize operations, automate tasks, and deliver personalized services. Moreover, the government has been actively promoting collaborations between academia, industry, and startups to spur AI innovation and create a vibrant ecosystem.

However, most businesses in Hong Kong today are still utilizing conventional labor-intensive forecast methodologies with predictive analytics to determine future growth, which largely avoid the use of AI. So, it’s time for the adoption of AI in this type of demand forecasting.

Challenges Hong Kong businesses face with traditional forecasting methods

Conventional approaches to predicting customer demand for goods and services, relying on manual data interpretation and analysis, are time-consuming and prone to human error. They struggle to cope with external factors that impact customer behavior, such as changing market trends, regulatory shifts, and even weather conditions. As a result, businesses relying on traditional forecasting methods often find themselves ill-prepared to meet customer demand, leading to operational inefficiencies and financial losses.

Furthermore, the sheer volume and complexity of data required for accurate demand forecasting can overwhelm human analysts, leading to less comprehensive analysis and unreliable forecasts. In industries like retail, where copious amounts of data are generated, the lack of proper data cleansing and organization can further impede the accuracy of forecasts. Poor data quality can result in manual intervention and order rectification, hindering operational automation and efficiency.

The transformative power of AI is on the way

AI-driven demand forecasting offers a transformative solution to these challenges, providing businesses with a competitive edge in an increasingly complex market environment. By leveraging machine learning algorithms, AI enables businesses to analyze data at an exponential rate, facilitating real-time demand projections. This automation of forecasting processes not only improves efficiency but also frees up human resources to focus on strategic decision-making.

According to a McKinsey report, applying AI-driven forecasting to supply chain management, for example, can reduce errors by between 20% and 50% - and translates into a reduction in lost sales and product unavailability of up to 65%. Machine learning algorithms excel in pattern recognition, surpassing human capabilities, especially when historical data is limited or fragmented. This ability to glean insights from smaller, disparate, or unstructured datasets levels the playing field for businesses that may not have access to large, structured datasets required by traditional forecasting methods.

Local businesses in Hong Kong still have a lot to learn, but one leader in this space is HSBC. The biggest of Hong Kong’s currency-issuing banks has been utilizing smart analytics to identify the behavioral spending and saving patterns among its customers. By leveraging AI algorithms and machine learning techniques, HSBC can analyze vast amounts of data to predict customer demand for its products and services accurately.

Embracing AI while nurturing human skills

While the benefits of AI in demand forecasting are undeniable, it is essential to strike a balance between technological advancements and human skills. AI is a powerful tool that enhances efficiency and precision, but it cannot replace human creativity, adaptability, and emotional intelligence. As businesses adopt AI-driven demand forecasting models, it is crucial to nurture and develop skills that complement the capabilities of AI.

Entrepreneurial and creative thinking, problem-solving, and relationship-building become even more critical in a world where AI takes on more automated tasks. By leveraging AI, businesses can free up human resources to focus on strategic endeavors, fostering innovation and differentiation. The coexistence of AI and human skills holds the key to unlocking the full potential of demand forecasting and driving sustainable business success.

AI-driven demand forecasting is revolutionizing the way businesses anticipate and respond to customer demand. By harnessing the power of machine learning, businesses can achieve greater accuracy, efficiency, and agility in their forecasting processes. AI's ability to process diverse datasets and provide real-time insights empowers businesses to make informed decisions, optimize resource allocation, and enhance customer experience.

That being said, it is still important to recognize that AI is a tool that complements human skills rather than replacing them. Businesses in Hong Kong must foster a culture that encourages creativity, adaptability, and innovation alongside the implementation of AI-driven forecasting models. By embracing AI while nurturing human skills, local businesses will be able to navigate the future with confidence - leveraging technology to drive sustainable growth and profitability.

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Workforce Planning Consultant at Verint