Director, National Valuation
t: +44 207 182 2663 Ben.Thomas@cbre.com
Associate Director, National Valuation
t: +44 207 182 2683 Judy.Zhu@cbre.com
In the last post ” How Can We Use AI?”, we explored possible areas where AI technology could be used. In this post, we are going to focus on the potential impact of AI.
Impact on Business
Without doubt, AI can help us improve work efficiency, especially in the areas that human workers are weak. For example, humans struggle with processing large amount of information and data, which is a particular strength of AI.
AI is already being used at the very highest level. According to SKY News, the Serious Fraud Office hired an “AI lawyer” to assist human lawyers in reviewing documents. The SFO said that technology was up to 80% cheaper than using outside counsel to review those documents and identify legally privileged material.
As we mentioned in the last post, AI can be used to manage warehouse space by predicting what will be needed at different times. Warehouse managers are then able to maximise the use of their space, racking and delivery times.
With the improvement of work efficiency, human workers can focus more on the creative and value-added jobs.
Quality and Variety of Products
With the increased work efficiency, more resources can be saved and reinvested to improve the quality of products and services.
AI can also directly impact on the quality of products. We mentioned a case in the previous post “Robotics in Logistics”: where a phone part manufacturer automated the manufacturing line, reducing the defect rate from 25% to 5%. AI can improve product quality in the same way – by reducing manual mistakes and optimising the operation.
AI can help to provide better service to clients too. For example, the online fashion retailer ASOS has introduced a new feature in their phone app, which searches products in ASOS inventory to match the items in uploaded photos by customers. This feature simplifies the searching process and improves the customer experience. Moreover, it increases sales – when given more options, customers tend to buy more.
As a result, the variety of products and services expands. One of the contributions to this expansion is the increase of personalised products, which usually generate higher margins than generic commoditised offerings. Personalised ad recommendations and discount vouchers already feature in our daily life, and more personalised products will be available to us in the future. For example, Nike has launched the product NIKEiD, which allows the customers to design their own personalised sneakers. Unsurprisingly, this product is powered by AI.
In the logistics sector, AI can help to provide customised warehousing service, as we explored in the post “Is On-Demand Warehousing the Airbnb of Logistics Market?”. Stowga, the on-demand warehousing platform which was involved in helping KFC find emergency space recently, manages their warehouse space by using AI.
As a result, we expect demand for products and services will increase and the suppliers can generate better profit.
Impact on Public Sector
Regulators need to take AI into consideration when penning down future policies. Regarding the regulation of AI programme development, they need to make sure any AI programme being developed does no harm to human beings. This issue has been warned by many high-profile figures and some of them jointly signed on an open letter on the matter.
In the domain of labour and social welfare, policy makers need to consider the impact of AI on the labour market, encourage the skill shift and, during the shifting period, protect those people whose jobs might be impacted.
At the international level, certain regulations need to be put in place and agreed on by different countries, to ensure the development of AI has an open environment and the use of AI is fair across the globe.
AI technology is being used to improve teaching methods, but there is more than just using AI in education. School education needs to equip future generations with skill sets irreplaceable by AI and instil a mindset to work closely with AI. This means education will need to blend the traditional teaching of knowledge and facts with developing creativity and problem-solving skills.
At the same time, ongoing education is needed for the current work force too, to get them prepared for the shift to a new work environment. That said, it doesn’t mean all employees need to learn how to program, but they will need to adopt a mindset of working with data and adapting to constant changes.
Will AI replace us in workplace?
Finally, we come to the question and the answer is:
Throughout history, human beings have always adapted to change. Animals and tools replaced human labour in farming and then machines came to revolutionise manufacturing. Similarly, part of the human work force will be, and is already being, replaced by AI.
A simple example is the spell check function in some word editing software. When we mistype a word, the word is either automatically replaced by a correct one or highlighted with a recommendation. We can ‘train’ this AI as well, every time we add a new word to the existing dictionary.
AI will not replace human workers completely, at least not in the near future.
Developing and using AI requires significant resources, such as financial investment and high-skilled workers. Therefore, businesses will start to consider replacing human workers only when they see the cost of AI can be covered by the reduction of human labour. But the labour cost of the most replaceable jobs (ones that are repetitive and predictable) is generally low. This will delay the adoption of AI in business.
Even if the decision has been made to adopt AI, the development of AI programs will take a long time. This is in addition to one AI currently only solving one type of problem (read more details about ‘Narrow AI’ here ).
With these factors combined, AI is unlikely to replace human workers completely in the near future.
The proper use of AI will bring benefit to human society. We should embrace it with a new mindset look to tailor policy and education to ensure we get the best from it in the future. If delivered and developed properly and carefully, AI won’t replace us in the workplace. Instead it will help us work better and more efficiently.