Predictive AI: When Artificial Intelligence Becomes a Prophet

25 September, 2024

Predictive AI: When Artificial Intelligence Becomes a Prophet

Have you ever wondered why phone applications can recommend songs, movies or products that match your preferences so accurately? That is Predictive AI, also known as predictive artificial intelligence. More broadly, this technology is also one of the advanced technologies that bring many benefits to businesses in effective business.

What is predictive AI?

Predictive analytics is the process of studying historical and current data to make predictions about future events or trends. This process uses a set of advanced mathematical, statistical, and machine-learning techniques to analyze data to identify and extrapolate hidden trends.

Many organizations and businesses have applied predictive AI to support strategic decisions. For example, insurance companies use AI to predict risks; e-commerce companies apply it to personalize customer experiences, predict shopping needs and consumer trends; supply chain managers use AI to support inventory management based on forecasts of goods demand, goods status, etc.

How does predictive AI work?

Similar to other machine learning applications, predictive AI is an agile activity that continuously uses new data to update predictions. That is, this technique uses classic machine learning processes to preprocess or clean data; and prepare an appropriate amount of data for model training, deployment, feedback, retraining, and redeployment along with the ability to import data in near real-time. Techniques include decision trees, regression analysis, time series analysis, and deep learning neural networks.

Simply put, once an AI model has been trained, it will produce future predictions based on new data.

Predictive analytics models play a role in guiding enterprises’ future business decisions. This analysis and prediction process is quite complex and involves many factors. In particular, predictive AI is often time-consuming, requiring continuous investment to respond to the constant fluctuations of the business environment.

Applications of predictive AI in life

Predictive AI in practice has been and is being applied in a variety of industries to promote business development, orienting towards effective business strategies:

Retail

Predictive AI helps optimize inventory. Based on previous data analysis such as sales data, seasonal trends and other data, AI can forecast customer demand in the coming period. This helps businesses accurately forecast customer demand, minimizing the situation of too much or too little inventory. From there, businesses save on storage costs as well as have a suitable production plan for each time.

For example, Amazon and Alibaba have optimized their inventory management processes thanks to AI that accurately predicts customer shopping needs and adjusts pricing strategies in real time. As a result, they can provide a more personalized shopping experience and increase revenue by delivering the right products at the right time.

Finance

The financial sector uses predictive analytics to guide decision-making, risk management, and fraud detection. Examples include predictive trading, credit risk assessment, and loan approvals. Banks use AI to analyze credit history, transaction behavior, and market data to predict customer defaults or detect fraudulent activity in real-time. This helps financial institutions reduce credit risk, improve the efficiency of lending decisions, and protect customer assets.

Manufacturing

In the manufacturing industry, predictive AI is applied to optimize production processes. Specifically, manufacturing companies use it to monitor production lines, detect errors and abnormalities, determine machine health, and predict maintenance requirements. As a result, businesses can budget for repairs, manage equipment, and finances more effectively. In addition, using this AI also reduces machine downtime and increases productivity.

Healthcare

Healthcare companies or the medical industry use predictive analytics on patient monitoring devices to detect changes and unexpected situations in real-time in a patient’s condition. Other use cases include medical diagnosis and predicting disease progression based on past data and the patient’s health status. Early prediction helps doctors intervene promptly, develop appropriate care plans, and improve treatment outcomes.

Transportation

In the transportation sector, it is used to optimize transportation operations and supply chain management. By analyzing data such as traffic flow, weather conditions, and travel routes, AI can predict delivery times, determine the fastest route, and prevent traffic jams.

For example, transportation companies such as DHL and FedEx use AI to predict future traffic conditions, delivery times, and transportation needs. AI also finds the most optimal routes. Predictive AI now plays an important role in optimizing transportation, saving on risk costs, ensuring more on-time delivery, production progress, and improving operational efficiency.

In short, predictive AI is revolutionizing many different industries. By making appropriate predictions, AI helps businesses make better business decisions, optimize processes, and improve customer experience.

Benefits of Predictive AI

Predictive AI offers significant benefits in various aspects. Here are four key benefits:

1. Optimizing processes, reducing costs and increasing operational efficiency for businesses. Businesses that use predictive analytics often have a higher competitive advantage than companies that do not apply predictive AI thanks to the ability to predict future events more accurately.

2. Supporting risk management. Analyzing data, predicting future situations such as unexpected incidents, fraud, risk assessment, etc. helps businesses take timely measures, reduce losses and improve reliability.

3. Predictive analytics personalizes the customer experience by making predictions based on purchase history, shopping behavior and personal preferences. Based on that data, businesses can provide products tailored to each customer, creating a sense of personalization and enhancing connection, improving satisfaction and increasing loyalty.

4. Providing detailed information and in-depth analysis helps businesses make appropriate business decisions and quickly adapt to market changes.

The development of artificial intelligence (AI) has brought about great advances in many fields. AI is expected to continue to grow strongly and have wider applications. In addition, generative AI is also opening up new opportunities, from content creation to product design, showing the limitless potential of AI in driving innovation and development in the future.

However, many people still confuse predictive AI with generative AI. To apply AI effectively, it is necessary to clearly distinguish the difference between these two types of AI. Each type of AI has different applications, understanding this difference will help businesses choose the right technology for their goals.

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