Tech advent beats complex business scenarios
In this highly competitive commercial world, efficiency and cost are probably the two most important factors that could dictate the survival and demise of market players, especially those involving supply-chain management.
While industry rivals normally begin the race by expanding their presence aggressively for market share, it’s also vital for them to consider the “tactic”.
For chain supermarkets, for example, how many stores should be opened in a city and where to place them in order to serve the biggest number of customers and achieve the best sales?
For logistics companies, where to set up warehouses and how to arrange couriers to achieve the highest efficiency with the least human resources is of utmost importance.
Such issues are becoming increasingly important as enterprises grow bigger, as they need to make decisions under complex business scenarios. While a right judgment could boost their performance significantly, taking the wrong step could lead to huge economic losses.
The principle behind the “tactic” is called “operations research and optimization” — something that has drawn growing attention from key industry players on the Chinese mainland.
Wang Zizhuo and his partners saw the opportunity and wanted to do something by banking on their scientific strengths.
The five Stanford University professors and PhDs set up Cardinal Operations in 2016 with the aim of using big data to provide solutions for companies to help them come up with the best business decisions. The startup now has offices in Beijing, Shanghai and Shenzhen.
“In the past, Chinese enterprises didn’t pay much attention to economical operation when expanding. At the time, their focus was merely on how to grab a bigger market share,” said Wang, co-founder and chief technology officer of Cardinal Operations.
“That’s why our country’s development has lagged far behind that of the United States in this area. But now, many have come to realize the importance.”
Cardinal Operations has teamed up with a number of big-name industry leaders, including the mainland’s second-largest e-commerce platform JD.com, courier giant SF Express, leading ride-hailing service provider Didi Chuxing and supermarket chain Yonghui Superstores.
According to Wang, his company mainly focuses on serving logistics, retail and manufacturing industries.
For retail enterprises, site selection is the primary factor for consideration. Traditionally, decisions are made based on personal experience. The method is time-consuming and any human misjudgment could lead to market failure.
Cardinal Operations’ smart site selection system is believed to offer optimal solutions, taking population coverage, construction cost, economic benefits and other factors into comprehensive consideration, based on its machine learning algorithm.
The company claims that with the help of artificial intelligence, retail enterprises are able to cover the same population as in the past, but only with 40 percent of physical stores.
Meanwhile, it also provides pricing solutions for e-commerce, logistics and other types of businesses, helping them to make flexible pricing strategies according to different business targets and achieve the best results. Customers are able to lift their profit margins by 10 to 15 percent, the company claims.
Yang Qiang, chair professor of the Department of Computer Science and Engineering at Hong Kong University of Science and Technology, said AI is driving enterprises to reform their operations.
He stressed that companies need to abandon their traditional way of running business and redesign their management and operating mode to enjoy the benefits brought by AI technology.
“Demand for using technologies to enhance operating efficiency among Chinese enterprises is increasing rapidly. But a problem is that many of them don’t have a developed data infrastructure. In other words, they don’t have sufficient data needed for the operation,” Wang pointed out.
Another problem is talent. “There are few AI talents on the mainland. So we have to hire them from overseas,” he said, adding that up to 80 percent of its technical team have an international background.
According to the 2017 Global Artificial Intelligence Talent White Paper published by Tencent Research Institute, global AI talent is experiencing a severe shortage.
There are about 300,000 AI talents worldwide, including 100,000 in educational institutions and the rest working in the industry, but the market still needs millions of such talents, the report said.
A total of 367 universities are offering AI research programs worldwide, with about 20,000 graduates each year, it said. Supply is far short of demand.
Despite the difficulties, Wang is determined to take on the challenges. Although he declined to disclose the exact figure, he said the company has generated tens of millions of yuan in revenue so far this year — an almost three-fold increase on last year’s figure.
“We expect to achieve an annual 200 to 300-percent growth in the next few years.”
Currently, Cardinal Operations’ customers are mainly large enterprises and the company provides basically customized services, which are hard to apply to others and the cost is relatively high.
“Our next step is to try to standardize our services so that more small and medium-sized enterprises can also benefit,” said Wang.
Our next step is to try to standardize our services so that more small and medium-sized enterprises can also benefit.”
co-founder and chief technology officer of Cardinal Operations