The Impact of Artificial Intelligence on Sustainable Development in Electronic Markets (Guest blog by NovaFori)
How AI can help business grow sustainability: data-driven marketplaces are changing the way businesses trade.
Across the globe, environmental sustainability is emerging as a business imperative as countries everywhere face the impacts of climate change. As a result, organisations in every sector face increasing pressures to decarbonise. The UK and, indeed, the world must aim to commit wholeheartedly to meeting net-zero targets. Customers now expect businesses to have firm carbon reduction targets and straightforward strategies to get there. Investors are also now choosing to put their money into companies with strong environmental credentials, as regulators require businesses to disclose their credentials.
AI advances will give rise to the digital transformation of our economies and societies. Today's AI era has only just begun and already touches many aspects of our lives. As AI capability accelerates, transforming enterprises and sectors in the process, it is critical to consider the real opportunities and threats that AI will create for our economy, society and environment.
AI can be harnessed in various economic sectors and situations to manage environmental impacts and climate change. Some examples of applications include AI-integrated clean distribution energy grids, precision agriculture, sustainable supply chains, environmental monitoring and enforcement, and enhanced weather and disaster prediction.
Applying AI to marketplaces to drive sustainability
It is estimated that using AI for environmental applications could contribute up to $5.2 trillion USD to the global economy in 2030, a 4.4% increase compared to the present. Moreover, McKinsey predicts that by 2030, 70% of all companies might adopt AI-driven solutions to streamline operations and improve productivity. These numbers signify that it's the perfect time for online businesses, marketplaces included, to embrace the power of AI.
The purpose of AI-driven marketplaces is to leverage the technology to gain detailed insights into large volumes of data, accelerate and improve operations, and deliver an enhanced user experience with personalised, near-real-time services. In addition, thanks to the behavioural data provided in the marketplace, businesses can optimize their operations process to best serve client needs.
An example of an AI marketplace applied to the Dairy market
Improving productivity without simultaneously increasing environmental impact is a key challenge for contemporary farming. Take, for example, dairy markets. Technological innovation has the potential to simultaneously provide key solutions for improving the efficiency of dairy farms, enhance animal productivity and reduce the sector’s environmental impact.
Thanks to marketplaces powered by data science, such as those provided by NovaFori, it's possible to increase the market clearance rate, which is critical to increase certainty and avoid wastage.
NovaFori have previously worked with Global Dairy Trade (GDT), a subsidiary of Fonterra Co-Operative Group. We designed and deployed a trade optimisation algorithm focused on market clearance, reducing waste in the value chain by ensuring there is a centralized, transparent marketplace for producers to sell their commodities to a wide range of buyers, rather than just a small number of larger buyers. The algorithm distributes the auctioned product across participating bidders, minimising residual unsold effects and satisfying as much demand as possible across all bidders, thus reducing the levels of residual waste.
By adopting a data-driven approach, businesses and organisations can leverage sales information as a strategic asset, generating actionable commercial insights and unleashing their true sales power, whilst reducing their environmental impact.
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