Economists doubt that artificial intelligence is already reflected in productivity figures. However, large corporations frequently discuss implementing it to increase productivity.
Wendy’s menu boards. freezers at Ben & Jerry’s grocery shop. The marketing of Abercrombie & Fitch. Artificial intelligence is becoming more and more integrated into many core components of the American customer experience.
Whether technology will genuinely increase business efficiency is the question.
Faster productivity growth is the goal for businesses and economic policy makers alike. Businesses must either give up profits or boost prices to cover salary hikes or capital projects if hourly output stays constant. However, when businesses find ways to increase output per working hour, it means they can continue to make more money even when they increase expenditures or investments. Productivity boom economies can see swift growth and pay increases without as great of a risk of inflation.
Though generative AI is still in its infancy, many economists and government officials remain skeptical that the technology has advanced to the point where productivity statistics are beginning to reflect it.
The head of the Federal Reserve, Jerome H. Powell, has hinted that artificial intelligence (AI) “may” be able to boost productivity growth, “but probably not in the short run.” Similar statements have been made by New York Fed President John C. Williams, who particularly cited the work of Robert Gordon, an economist at Northwestern University.
Mr. Gordon has maintained that although new technologies are significant, they have most likely not been revolutionary enough to support productivity growth in the long run.
In an interview, he claimed that “the enthusiasm about large language models and ChatGPT has gone a bit overboard.”
The last time productivity increased significantly was in the 1990s, when computers themselves were becoming more efficient and computer manufacturing was becoming much more effective as well. This resulted in a productivity surge that affected the entire industry. The advantages of today might be narrower, he believes.
There are more upbeat economists. Mr. Gordon has placed a $400 wager with Erik Brynjolfsson of Stanford University that productivity will soar this decade. A portion of his optimism stems from A.I. He co-founded a business that teaches businesses how to use technology, and he conducted an experiment with it at a sizable call center, where it was notably beneficial to less experienced employees.
Many businesses appear to be in Mr. Brynjolfsson’s camp, believing that their workplaces would undergo a radical transformation thanks to the new, shiny instrument. Businesses use artificial intelligence (A.I.) and generative AI for a wide range of tasks, such as price assistance, email marketing, and responding to legal and HR inquiries from staff members.
These are several instances, gleaned from financial filings, earnings calls, and interviews, where businesses claim to be utilizing the most recent artificial intelligence technology in ways that potentially affect productivity.
Got an annoying task? There’s an A.I. for that.
Workers put in a lot of time attempting to find answers to inquiries pertaining to human resources. Generative AI has been a source of investment for companies looking to respond to these questions faster.
With 1.6 million employees, Walmart is the biggest retailer in the country. Its employee app features a “My Assistant” section powered by generative artificial intelligence. Using technology, the feature may instantly provide answers to common queries like “Do I have dental coverage?”, compile meeting minutes, and assist in creating job descriptions.
Last year, Walmart implemented the technology for its corporate employees in the United States.
The purpose of the tool, according to the retailer, is to increase productivity. Walmart’s chief people officer, Donna Morris, stated in an interview from the previous year that one of the objectives was to get rid of some menial job so that staff members could concentrate on more important duties. The company anticipates a “huge productivity lift,” according to her.
The algorithms want to sell you things.
Macy’s CEO Tony Spring announced that the department store business was experimenting with artificial intelligence (AI) to customize its marketing. The company is investigating ways to utilize the technology to add product descriptions online and to recreate photos of clothes or other things for sale over different backgrounds. It is also using generative AI to write parts of emails.
In an interview, Mr. Spring stated, “It’s definitely showing up as a tool for some colleagues to reduce workload.”
For its website and app, Abercrombie & Fitch is employing generative AI to assist with clothing design and content writing. Designers explore ideas for clothes using an AI graphics application called Midjourney, which helps them create visuals. Employees in the marketing division of Abercrombie.
Chief digital officer at Abercrombie & Fitch, Samir Desai, noted that while the company and its brands might list several hundred new products on their website in a week, technology aided in expediting a time-consuming process.
While acknowledging that it was challenging to put a number on the amount of time and money being saved, Mr. Desai stated, “I think right now there’s a lot of trust and belief that these are productivity enhancers, efficiency boosters.” “I believe that will start to show up in how much more work some teams are able to complete than in previous years.”
A.I. pairs well with burgers and ice cream.
Like Uber, which sets car costs according to the number of passengers wanting to ride, some businesses hope to leverage the most recent advancements in artificial intelligence technology to help match prices to demand.
For example, Wendy’s has proposed utilizing artificial intelligence (A.I.) to detect slower periods of the day and cut menu item pricing on its digital boards.
Technology may also be useful for managing inventories. Ben & Jerry’s installed artificial intelligence (AI)-capable cameras in grocery store freezers to assist the company know when a location was low on pints of Cherry Garcia or Chunky Monkey.
“The software not only helps plan the most efficient routes for trucks that can restock the inventory, but it also identifies what is about to run out,” said Catherine Reynolds, a spokesman for Unilever, the parent company of Ben & Jerry’s.
8,000 freezers currently have artificial intelligence installed, but the company said it intended to greatly raise that figure this year. According to Ms. Reynolds, freezers equipped with artificial intelligence (A.I.) technology saw an average 13 percent boost in sales due to the replenishment of fresh pints of ice cream, especially the most popular flavors.
A.I. is getting into the weeds.
A.I. and cameras have been used by agricultural equipment manufacturer Deere to enhance herbicide sprayers. Chemical application can be done more precisely because to the equipment’s ability to identify and target weeds specifically. The technique was unveiled in 2022, and according to the business, it prevented eight million gallons of herbicide from being used last year while covering 100 million acres.
The company’s CEO, John C. May II, stated during a press conference in February that “customers can reduce their herbicide use, lower their costs and minimize impact on their crops and land” thanks to the technology.
Are these game-changing improvements?
The fact that many of AI’s applications replicate what software can already do lends credence to skepticism about the technology’s ability to bring about significant change. Sure, there are advances, but they’re not always revolutionary.
Even though it might take some time for businesses to fully utilize artificial intelligence (AI) capabilities, some economists are enthusiastic about the potential benefits of these new technologies for increased productivity due to their wide range of applications.
A.I. might prove “transformative” for the US economy in the second half of the 2020s, according to Vanguard analysts, according to Joseph Davis, global head economist at the financial company. According to him, technology may save workers in around 80% of occupations significant time—possibly 20%.
He clarified, “We’re not seeing it in the data yet,” adding that he believed the current increase in production was more of a rebound from a sharp decline that occurred during the pandemic. “There is another wave on the way, which is good news.”