AI in the FMCG sector: companies need to act now!

This article is available for reading in Trade magazin 2024/8-9

Dr. György Tilesch
AI-expert, founding president
PHI

Asia is speeding, America is waking up, and Europe is following

Asia is AI-optimistic: acceptance levels in the region, including China, India, Singapore and much of Southeast Asia, reach 80-85%. In this part of the world society, political leaders, and large corporations see AI as a key technology in their global competitiveness and aspirations for world power. America has been asleep for a long time. Although the tech giants are American, they have paid little attention to AI as regards regulation and social vision. Waking up in time has paid off, for instance Amazon has been relying on AI in its expansion since 2015, gaining an 80% advantage over Walmart in just 3-4 years. Europe, which lags behind the US and China in terms of technological potential, is primarily focusing on regulation. Besides promoting technological development, there is great emphasis on limiting the excessive power of US platforms and the entry of Chinese technology, taking into account privacy issues incompatible with European values.

Time to face the challenges

A large part of AI risks are related to the currently dominant large language models such as GPT (Generative Pre-trained Transformer), which can hallucinate and generate irrelevant information – but the level of this faulty operation will soon reduce. According to Dr György Tilesch, there are three main factors that determine the challenges related to AI. The first is exponential technological development, which is particularly visible now that we have ChatGPT 4.0, which can process images, sounds, and text simultaneously. The second is the regulatory delay, as regulation is 4-5 years behind, plus in Asia it is significantly less restrictive than what fits with European values. The third major challenge is the ability of society to adapt, which isn’t only unnecessarily afraid of the changes that AI will bring, but also slow to recognise the disadvantages of AI technology, such as the transformation of the labour market.

In Hungary, most large companies already have the initial learning phase behind them and have launched their first major AI projects linking technology opportunities to corporate challenges

Sales, ESG, and optimising shipments

FMCG companies adopting AI: this has brought great changes in business strategies and operational processes. Today companies are increasingly putting their business departments – such as sales – in charge of their AI strategy, instead of the former IT domain. Dr György Tilesch’s clients include a large Western European FMCG company, where the sales department determines which AI solutions are prioritised based on business considerations. At another European FMCG company the use of generative AI has helped to align the work of sales teams active in different geographical areas, who had previously not communicated with each other.

In Asia, the adoption rate of AI reaches 80-85%, so there is full support for the development of AI without restrictions, which allows them to be at the forefront in this field

Hungary can close the gap

Currently Hungary is in an intensive phase of AI adaptation, with companies moving from innovative ideas to formulating and sometimes implementing their own strategies over the past two years. Most large companies have already moved beyond the initial learning phase and have launched the first major AI projects, linking technology opportunities with business challenges. The Hungarian government announced the national AI strategy three years ago. We often hear that Hungary is a small country, but according to Dr György Tilesch, other small countries in the region have already proven that the key to success lies in the concentration of resources and specialisation. //