It was merely two years ago in March 2016, when history saw a human’s inevitable defeat to the hands of artificial intelligence, as the match between Lee Sedol (one of the best Go players of all time) and AlphaGo came to a close, with Lee losing 4:1. It was then, the world awoke to the looming reality that times were truly changing.
Since then, businesses and industries alike have taken more notice of the disruption that technology, especially AI, has been making on every sector of our work.
Making more with data
From the health industry to finance, there has been no escaping the reach AI has made, and the sheer amount of change that lurks around the corner.
Although AI has technically been around since the 1950s (created by the father of modern computing, Alan Turing), the world has only just begun to see real, practical applications in the past few years.
The reason for this has largely been due to the advancement of computing power and the Internet, which in turn has inundated us with piles of big data. And now, using algorithms from a section of AI called machine learning, organizations are learning to dig through heaps of data to gain valuable insights. This process thereby has allowed many people to see the massive opportunities for changing their industries through smarter data-driven decisions.
When AJ met AI
Amongst those who saw the sheer potential of machine learning’s applications was AJ Mak, a businessman from Hong Kong. Educated in both the US and Canada, Mak spent the better part of the last 10 years working in the apparel industry.
From branding strategy, business development to eventually working as a Director for M.R. SIMAK– a leading apparel supply chain management company– Mak had been a part of every level of the apparel business. It was during these years; he reflected on the many inefficiencies and problems within the industry.
As a data-centric person who had studied Decision Science at Carnegie Mellon University, his analytical mind steadily broke down the shifting signs around him, and in that process, Mak stumbled into the world of AI.
The demand for change
Since 2015, the retail industry has been in the midst of a harmful phenomenon termed ‘the retail apocalypse.’ From 20,000 + stores shutting down all across the world, it has been a problematic issue that has plagued fashion retailers for some time. In the US alone, big-name retailers have filed for bankruptcy and many brands with multi-channel sales have felt its hand. Even within the first quarter of 2019, it was reported that 5000 + retail stores had closed. As Mak states,
Having been in the apparel industry for the past ten years, I have never seen a problem as detrimental as the one we have been experiencing in the last three – inventory waste and markdowns.
Anyone in the fashion industry knows, markdowns are the single biggest killer of profits. With the problem of over-inventory destroying big and small brands alike, and subsequently their entire supply chain, Mak drew inspiration from this issue and searched to solve this pain point.
After months of learning as much as he could about the applications of machine learning, Mak embarked on a new journey to create a helpful solution. In 2017, he founded Chain of Demand, an AI-driven predictive analytics solution that helps fashion brands make faster, better, and easier business decisions.
Pain points and surprising truths
With a grand vision to change a trillion-dollar industry and backed by Vectr Ventures and Mindworks Ventures, the gears of Chain of Demand turned. Yet, like any start-up, the stormy seas to growth are never smooth.
Chain of Demand is, at its root, an AI-driven company. Thus, convincing the average business of its potential hasn’t been a walk in the park, regardless of the surprising outdated methods many companies still take.
Many companies still use Excel to perform forecasting and planning, and it was surprising to find out that forecast accuracies are not really tracked throughout the industry. Don’t get me wrong, Excel is my favorite application of all time, but it has its limitations as to the amount of data you can analyze effectively.
Mak notes that one of the toughest challenges in building a company like Chain of Demand has been finding the right talent that can help build their proprietary predictive AI-system.
According to a report by Chinese tech giant Tencent released in 2017, they estimate that there are only about 300,000 active researchers and AI engineers in the entire world, with about one-third of them still studying. This pool gets even smaller when looking at Asia, as the only two countries in this market that serve as actual key players are China and Japan.
Additionally, as many founders and CEOs may know, culture is one of the most important driving forces that help keep a start-up afloat. Even with the right talent, it is essential to ensure that the flow of culture continues to flow smoothly. As Mak expresses,
Culture is the software of our company. It is what we run on and how we run our business, which is why I want to ensure that our culture is maintained. But, in the end, culture changes with the people that are in it, and as a company grows, it will be harder to instill a specific culture. So, the best I can do is to ingrain our values into everything we do.
Predicting the future and beyond
Despite all the initial challenges, Chain of Demand is currently made up of a small, yet strong team of engineers, data scientists, marketers, and consumer behavior professionals.
Recently piloting for some big brands and mentioned in several publications like South China Morning Post, Mak plans for the next 12 months are to continue building out the team and launching the next version of their products. He hopes to be cash flow positive within the next three years.
With the expectation to help the fashion industry shift towards a speed-to-market model, where fewer products are left unsold, and consumers get more of what they want, when asked about what drives him to get out of bed every morning, Mak tastefully responds,
“I love technology and being able to apply it to help our environment, while also boosting profits for companies, combined with the opportunity to work on this with a dedicated team is what gets me out of bed every morning.”