The Impact of AI

The CEO of Proton.ai discusses the growth of artificial intelligence (AI) and why it could be a game-changer for the electrical distribution industry.

Focused around the development of smart machines capable of performing tasks that typically require human intelligence, artificial intelligence (AI) is an ever-expanding branch of computer science that’s penetrating everything from robotic processes and machine learning to computer vision, language/speech interface, and more.

But as futuristic as the technology may sound, it’s poised to represent an over $100 billion global market in the next five years and is closer to home than people may think.

“You might be surprised to know that you’re already using AI in a ton of different ways right now,” shares Benjamin Cohen, founder and CEO of Proton.ai, a Harvard University/Allston, Massachusetts-based firm that brings AI technology to B2B markets. According to Cohen, who has an intimate understanding of the distribution field based on his experience with the dental distribution business his family has run for four generations, “AI is basically any intelligence demonstrated by machines. Businesses use these programs to automate tasks normally performed by humans – things like email spam filtering, GPS navigation, and voice assistants are all examples of AI in action. These tools analyze tons of data, perform specific assigned tasks (e.g., identifying spam, calculating the quickest routes, and recognizing spoken words), and can be used in more advanced forms to predict customer behavior.”

Many companies rely on the strengths of AI today – as demonstrated through such processes as Amazon’s product recommendations, Netflix’s show suggestions, and Spotify’s curated personal playlists – and Cohen believes that AI will continue to play a significant role in business and society. “I think that as we move forward, AI will push us toward a more personal world by helping companies figure out exactly what customers want,” he says.

An Optimized Distributor Tool

“Companies have long been using AI to analyze customers and personalize their sales activities, but no one was making those kinds of tools for distributors, which is why I started Proton,” shares Cohen, who studied data science at Harvard and realized that distributors weren’t getting the best technology available.

“Electrical distributors face the same challenges as many other companies in that they deal with a lot of different customers across multiple channels and have tons of different SKUs, which makes it difficult for the average salesperson to guess exactly what each customer wants,” says Cohen, who noted that AI fixes this by supplementing electrical distributors’ sales strategies. “When electrical distributors base product recommendations on data instead of guesswork, they’re far more accurate,” he says. “And this process also benefits contractors and other buyers, as no contractor wants to get held up on a project because they forgot something or bought the wrong item. With AI, distributors can help flag missing items, create smart order kits, and remind contractors to make necessary re-orders.”

While there are many different types of AI technology, Cohen believes that distributors should focus on ‘deep learning’ approaches, one of several machine learning methods based on neural networks. Specifically, “deep learning models learn from real-world information and can account for messy, non-linear patterns in customer preferences,” he says. “Simple rules-based recommendations (such as, “if someone buys Y, sell them X”) and linear models (e.g., “the older someone is, the more likely they are to buy Z”) don’t perform well in practice because they don’t account for the complexity of the real world,” he explains. “By contrast, deep learning models can take in more context to create more accurate predictions. Therefore, if you’re going to buy an AI tool, make sure it uses deep learning,” he advises. (For more information on this topic, check out this article about why neural networks work so well, authored by Proton.ai’s Head of Data Science, Joseph Kibe).

Real-Life Considerations and Opportunities

As someone who’s passionate about helping distributors make the most of their technology, Cohen says that he regularly confronts user fears surrounding the growing impact of AI on business and society. “The truth is, people don’t need to worry about AI “Terminator” robots taking over the world,” he assures, “but concerns about AI eliminating jobs are completely valid. AI can automate certain tasks, which means that certain jobs are at risk; for example, self-driving cars may eventually replace professional drivers. But a salesperson worrying about being replaced by AI is kind of like an author worrying about being replaced by a typewriter,” he contended. “AI is a great tool that can help salespeople work more effectively, but it’s certainly not a replacement for them. In fact, salespeople should be very excited to start using AI tools – especially if they’re paid on commission.”

“Overall, I feel that AI will be a game-changer for the electrical industry,” Cohen said. “A recent study reported that 75% of customers are more likely to buy from a company that personalizes sales, which confirms that companies succeed when they offer customers what they want. Customers definitely want AI-enhanced, personalized experiences, and distributors who can offer those kinds of experiences will gain customers at the direct expense of those who don’t.”

Looking ahead, Cohen encourages distributors to invest in AI early. “AI needs some time and data to start performing, but those investments are absolutely worth it,” he said. “A recent McKinsey simulation found that those who adopt AI early will increase cash flow by 122% over the next decade. Slow adopters will become stagnant and non-adopters will actually see their businesses shrink.”

“AI might sound futuristic,” Cohen concluded, “but it’s here now and distributors should embrace it quickly before they become history.”

Benjamin Cohen regularly authors short, approachable articles for the National Association of Wholesaler-Distributors and MDM and is happy to address any questions or comments on AI. He can be reached directly at benj@proton.ai.