Where Should Brands Start with Generative AI?

Is your brand ready for the “Age of AI”?

Artificial intelligence, in general, can be thought of as a technology to augment or automate decisions. But what makes AI so interesting is that it impacts nearly every industry, nearly every department, and even every job function – from the frontline worker all the way up to the CEO. For CPG companies, it can be a tool that helps shape the trajectory of business. Whether it’s about enhancing customer service with buyers and sellers, tailoring products and services, avoiding downtime, or anticipating future needs, AI offers a powerful suite of capabilities that can set the stage for sustainable growth, innovation, and long-term success.

But while AI – and its derivatives, such as generative AI – offer incredible opportunities for CPG companies, it’s still not well-understood by many. Let’s look at where generative AI fits in the field of AI and  along with that, how you can begin to take advantage of all the innovation offers in a safe and responsible way.

How Does Generative AI Fit into the Field of AI?

Artificial intelligence is essentially pattern matching at scale. With its pattern recognition capabilities, AI can perform image recognition, understand the natural language and writing patterns of humans, make connections between distinct types of data, identify abnormalities in patterns, strategize, predict and more. AI’s large language models (LLMs) have been used for years by data scientists and analysts.

The general public has had access to simple versions of AI for many years. Think Siri and Google Assistant. These AI-based helpers could answer our questions, perform simple tasks like looking up the weather, and even execute pre-configured automation tasks. But they were just the precursors to something much bigger.

Then came ChatGPT in 2022, and with it, the dawn of a new era. Thanks to the free web browser interface, the general population could now see the explosive value of AI in a chat-like text format, marking a seismic shift in the relationship between humans and AI.

Generative AI models are increasingly being incorporated into online tools and chatbots that allow users to type questions or instructions into an input field, upon which the AI model will generate a human-like response. This unstructured conversation and AI’s ability to remember the context of what is being asked, is one of the biggest benefits and differentiators of Generative AI.

Just think, a generative AI bot trained on proprietary knowledge such as policies, research, and customer interaction could provide always-on, deep technical support. For example, by feeding a generative AI model vast amounts of fiction writing, the model can, over time, identify and reproduce the story elements including plot structure, characters, themes, and narratives.

Impact of AI tools on CPG Brands

The CPG industry stands to be an early frontrunner in realizing gains from AI-based technologies. Let’s look at the ways:

Personalization

Personalization holds the transformative potential to revolutionize sales and marketing strategies in the retail and CPG sectors, particularly by customizing messaging. Today’s B2B buyer expects content and interactions to be highly customized to their industry, interests, and their role in the buying group. Sellers can use generative AI to analyze and improve their understanding of each individual buyer within a buying group and deliver highly personalized content, messaging, and proposals.

Generative AI can also be used to create highly tailored and personalized marketing campaigns that resonate with individual customers, increasing engagement and conversions. Additionally, precise targeting of localized market segments allows brands to deliver relevant and targeted messages that effectively capture the attention of specific regions or demographics.

Sales Insights

It can be challenging for companies to sort through multiple sources of information to connect their offerings to customer needs, then express value in terms that resonate with buyers. Generative AI will enable sellers and sales managers to use natural language queries to quickly identify insights without regard to data sources, rigid system interfaces, or limitations of analytics teams.

Generative AI can simplify the process of account analysis, account planning, and execution by collecting and analyzing large amounts of structured and unstructured data such as annual reports, press releases, product information, and company websites to identify goals, initiatives, and relevant activity that helps sellers identify pain points and express value in customer terms.

Product Development

AI can reshape product and service creation, by enhancing existing offerings and introducing new products and services. Generative AI’s integration with data, analytics, and customer preferences empowers product development in CPG, propelling innovative and efficient design processes. Businesses can then create products that resonate with customers and drive success in the competitive CPG market.

Supply chain

By combining generative AI with advanced analytics, businesses can gain valuable insights into demand forecasting, inventory management, and logistics optimization, streamlining operations and reducing costs. It can be the difference between thriving and merely surviving. For instance, you can anticipate seasonal demands or pinpoint emerging product trends, enabling stock optimization and more strategic marketing campaigns.

Create a Company Policy for Generative AI

While generative AI offers incredible, innovative opportunities for every business department— especially for marketing, customer service, product management and development— a measured test-and-learn approach is advised to balance potential gains with the inherent risks and challenges. People are using generative AI, but are they using it correctly? Are they relying on it when they shouldn’t? Or worse, are they unknowingly exposing company information to the public?

“Some of the 100 million people already using generative AI work for you.”

Ted Schadler, VP, Principal Analyst Generative AI Will Sprint Into Your Business Through Four Doors (forrester.com)

The first step for every company, regardless of industry or digital maturity, is to come up with a policy for generative AI. A good company policy for employees using generative AI should address ethical concerns, ensure legal compliance, and promote responsible usage of the technology.

Three Areas Where You Need Generative AI Policies

1. Open Generative AI Tools

Your employees are using public generative AI tools like ChatGPT, but do you have rules around what they can use it for? What company information are they allowed, or not allowed, to load into it? A lot of people don’t realize that the minute they load something into the public version of ChatGPT, that data is used to train the tool’s algorithms – which means that it’s potentially available and accessible to anyone else using it.

In the CPG world, for example, an employee might be using ChatGPT to generate new product suggestions by loading the tool with consumer feedback, quality reports and competitive product data. Suddenly, your proprietary product data is being used to train a public model. That sounds scary, and it is, so you’ll need guidelines around how employees can use public AI tools and the types of data they enter.

2. Generative AI Tools Integrated into Business Applications

Microsoft’s integration of the OpenAI platform is being integrated into its suite of products – branded under the name Copilot – means that ChatGPT’s capabilities can be turned on in Microsoft applications, and nothing needs to be done on your end. When they are available to your employees, how are you going to make sure they’re using them productively? How can you ensure them responsibly?

Let’s use Microsoft Teams as an example. When you record a meeting in Teams, you can make the meeting transcription accessible to the ChatGPT model that’s built into Teams and ask it to 1) summarize the meeting in less than 150 words, and 2) list out all the assigned action items that were covered. This is a really cool feature, but you have to record meetings in order to do it. Maybe there isn’t any issue with employees recording internal meetings, but what is the policy around recording external meetings with customers, partners, or suppliers?

3. Private Generative AI Tools

Microsoft’s Azure OpenAI services means that companies have access to the ChatGPT model and can build their own enterprise ChatGPT inside their company, where they can safely and securely attach their own company data to it. You can do some really transformative things with this, but you need strategy and policy to support it.  

Internal use is where you’re going to rely on your own ChatGPT to make decisions for you and your employees. But a question you need to answer is, how are you going to validate the fine-tuning of your model’s output (especially in the case of calculations or forecasts)? Is validating the output two times good enough? Or do you need to validate it 100 times? You need a solid answer to that before moving forward.

At Hitachi Solutions, we’ve taken the Open AI service one step further, with our Enterprise Chat solution—it’s a private generative AI experience that is designed to boost internal productivity, improve customer experiences, and reduce operational costs – all while keeping your data confidential and secure. But if you’re not sure where to start, our two-week assessment can help guide you toward how to prioritize and prepare for leveraging AI as a solution tool in your organization.

A private enterprise ChatGPT can also be used externally—as an interface with customers – such as for support, or customer service, or even for sales. So, think about it like a chatbot on your website, but on steroids.

For example, imagine you’re a retailer like Nordstrom and have a private generative AI tool that you share externally with your customers. A customer could type: “I really like the style of Pierce Brosnan in The Thomas Crown Affair – what clothing do you have that you could recommend that would look like him?” Having a “company ChatGPT” that can interface with customers and provide personalized recommendations can dramatically change the way companies engage.

Where Do You Start?

As AI is poised to transform our lives, it’s important to acknowledge there is risk associated with this technology. Together, we must define new rules, norms, and practices for the use and impact of AI.

Executives can cultivate a security-first mindset throughout their organizations regarding the use of generative AI for both personal and professional tasks. Employees will, and are, using free AI tools whether we like it or not. So, it’s important to set guidelines and communicate with employees outlining expectations and consequences for abuse. As with all security training, make sure communication is ongoing and provide guidance on where employees can report concerns or ask questions. Executives play a key role in the leadership and culture of AI adoption and expansion.

Embed governance into existing practices and roles. As AI transitions from algorithm to how the business runs, the C-suite to the board need to be aware, trained, and sponsoring AI governance best practices. Encouraging new responsibilities and ownership is challenging, but necessary for successful governance. To reduce friction, company culture and operational practices should inform AI governance

Data cannot be an afterthought in generative AI; it depends on accurate, complete data. Sales and sales operations leaders must increase efforts to improve data hygiene and enhance data quality by automating or eliminating manual data entry wherever possible. Invest in data quality and hygiene initiatives. The adage “garbage in, garbage out” is still true in the age of generative AI. Analysis and content generation based on incomplete or inaccurate data will yield incomplete or inaccurate results.

Then, find time to experiment with generative AI in a manner that reaps benefits while staying mindful of potential pitfalls. Pick one or two low-risk use cases that will not disrupt your operations. Consider: If all your company’s data were accessible and loaded into your private ChatGPT, what would be the top three things that you would ask it? It’s a great question because it shows intent and vision, as well as an understanding of the technology at the same time. Ultimately, your answer to this question may or may not be truly leveraging the power of generative AI. This usually results in business leaders having a much larger conversation around what ChatGPT can actually do, what they want it to achieve, and where they should be putting their effort.  

Finally, if you’re using integrated or private AI systems, ask your vendor partner tough questions about the underlying training data, what capabilities exist for fine-tuning the vendor’s model to your business, and what guardrails are in place to limit bad actors (both internal and external).

Need Clarity on how to Adopt AI Responsibly?

Hitachi Solutions works with executives and enterprises to understand AI, recognize how it will affect work culture, and then set go-forward possibilities. In our own internal operations, we approach AI ethically and responsibly, and can bring this framework to organizations who are looking to explore the value and benefits of AI. Our advisory team of experts will build your confidence in your ability to safely adopt AI tools focused on tangible business outcomes, first by evaluating your organizational readiness to adopt and embed these tools into your applications and/or workflows. You’ll want to take advantage of AI in a way that your organization can trust. AI shouldn’t replace human interaction; it should facilitate and augment it. With a clear understanding of business impact, ROI, and cost benefit insights, you’ll be able to see through the headlines and get to what matters for your enterprise.

Future of CPG with Generative AI

While generative AI is exciting, the applications of tomorrow are even more thought provoking. Imagine a CPG executive seeking a quick overview of the month’s sales metrics, supply chain inefficiencies, or inventory levels. Instead of trawling through multiple databases or waiting for compiled reports, the executive could query an advanced AI system. This system, equipped with natural language processing, would not only present the required data, but it could also offer insights, trends, and suggestions.

Generative AI is likely to have the biggest impact on knowledge work, particularly activities involving decision making and collaboration, which previously had the lowest potential for automation.

McKinsey: The economic potential of generative AI: The next productivity frontier

In addition, AI will only amplify the burgeoning focus on customer experience, as companies attempt to craft new experiences to meet continually rising consumer expectations. AI is already a fundamental piece of how big companies like Amazon are creating personalization campaigns, delivery options and better products based on targeted consumer needs, wants and expectations, and those predictions will only get better and more refined as time goes on. Still, there are situations where generative AI will fall short—and this underscores the continued need for human involvement if the problems are complex.

Leading in the Age of AI

Everyone can benefit from AI. Sellers can move deals forward faster with AI-assisted email replies, from information requests to contracts. Marketing teams can get dynamic customer segmentation for personalized marketing. Customer service agents can resolve issues faster and with more relevant personalized recommendations. Operations managers can better predict and act on supply chain disruptions. And businesses of any size can bring products to market faster with AI-powered product descriptions. 

Ultimately, AI won’t merely enhance productivity—it will serve as a cornerstone for transformative growth and long-term success. Artificial intelligence, in various forms, has been intertwined with daily life for several years. However, the rapid proliferation of generative AI tools has made this technology now accessible to the general public. This accessibility shows a glimpse of AI’s power and potential— it inspires some and scares others.

As a premier Microsoft partner, Hitachi Solutions is ‘all in’ with AI, and ready to apply our expertise and help you prepare. It takes a special technology partner to be able to deliver not only the technology, but the support required for adoption and compliance. Contact us for guidance on how to take the next step, and we’ll help you kickstart your AI journey and open a new world of business potential.