Could AI help stabilise the biggest threat to business recovery, inflation?
As UK businesses navigate their recovery, they will need to manage new risks. Namely, organisations will need to grapple with the UK rate of inflation, which has risen sharply in 2021 from 1.5% to 2.1% – the highest it has been in nearly two years. While major fluctuations in demand continue to threaten revenue targets across industries, rapidly rising inflation will be particularly challenging to manage for businesses with outdated, inflexible pricing processes. Inflation rate fluctuations have a knock-on effect on revenue and pricing, threating businesses’ ability to protect their bottom line.
Why accurate pricing is essential Many UK businesses are facing changing legislation, border controls and travel regulations this year, as they look to calibrate their pricing against changing demand and inflation. Certain industries have already seen their difficulties in this. The automotive industry has experienced shortages in semiconductors obstructing their ability to meet rising demand for cars. As a result, dealers are having to charge more, at inflated rates, even for used vehicles. A similar situation is occurring with the restriction of transportation of products such as chemicals and food across borders. The inability to rapidly adapt to market fluctuations opens pricing teams to errors and makes it difficult to align pricing across sales channels.
The cost of commodities is drastically shifting, and cost-plus or markup tactics are no longer enough. Adaptable and accurate pricing, often an afterthought compared to increasing revenue targets or marketing campaigns, can have a profound impact on business performance if done correctly. Accurate forecasting is key to helping optimise price points, providing businesses a competitive advantage, particularly in a volatile economic climate.
**Pricing dynamically with AI to combat changes ** Amongst such uncertainty, Artificial Intelligence (AI) can enable businesses to adapt more nimbly to market changes like inflation, rather than relying on cumbersome manual processes and reactive methods. In capturing complex data patterns, AI can predict how consumer demand will respond to price changes. Businesses not leveraging AI-based solutions are more likely to be reactionary to inflationary market conditions, putting out pricing that is stale and unaligned across sales channels.
AI-based pricing systems enable businesses to quickly and accurately gather insights from their supply chain and augment their pricing strategy to maintain a balance between business objectives –winning in the market, protecting profits and keeping customers happy – even when there are disruptions such as inflation. Adopting AI will be crucial for businesses to remain flexible in an ever-changing economic landscape, as well as to shore up revenue for potential growth opportunities in a post-pandemic environment.
This was posted in Bdaily's Members' News section by PROS .
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