Millions of decisions are made every single day in businesses across the globe. In a supermarket, for example, managers have to make large numbers of decisions, from stock levels to pricing and offers. It’s incredibly difficult for a store manager to make accurate decisions consistently.
Many of these decisions are operational and can be driven by data; they do not require human insight, only strategic oversight. It is possible to automate these frequent decision using data science and algorithms, leaving employees to focus on the jobs they are trained and hired to do, whether that’s providing a superior customer experience, or innovating.
Data can help make decisions, but whether you have a terabyte or a kilobyte of data it is only valuable if you can draw insights from it. More than that, to get real value out of your data you need to utilise statistics and science to predict outcomes from data and automate business decisions.
According to Gartner, 2016 is ‘the year of the algorithm’. This means companies will be valued not just on their data assets, but also on the algorithms that turn this data into actions to save money and improve service. It also means that those companies that do not begin using algorithms will be left behind, missing out on operational efficiencies and improved customer experience. Only through algorithms can you collate actionable insights, automate operational decisions, and create transformative value.
A good algorithm answers questions from data that has been collected and uses it to create a series of models to predict the future and make decisions. Once you have applied algorithms to these key processes, the next step is to automate them. Automated processes based on algorithms can be applied in a range of industries – one example is retail.
Algorithms can be used to automate replenishment to ensure that companies don’t overstock or run out of stock, thus reducing waste and improving customer satisfaction. With British supermarkets recently pledging to cut food and drink waste by one fifth by 2025, algorithms will play a key role in achieving this goal.;