CPG companies have not been feeling the love in the past decade.
In their heydays, they used to set the benchmark for analytics that other industries would follow. CPG companies used to be the leaders in understanding consumer behavior, anticipating shifting consumer trends and generating actionable insights, all of which translated into superior business and financial results.
But the past 10 years have seen a steady decline in the sophistication of methods, systems, and processes adopted. Adverse macro-economic trends (slow growth, intense competition, rising commodity costs, increasing strength of ecommerce retailers etc.) have led to a decline in analytics budgets.
In turn, this lack of investment has created an array of challenges:
- Creation of data silos that don’t talk to each other
- Lack of comprehensive view of business
- Long lead time for translating data into decisions
- Backward (not – forward) looking insights
- Inability to deal with new data sources such as social, mobile, and digital
As CPG companies have realized gaping holes in their insights and analytics groups, they’ve tried to solve this by throwing an army of people into an on-shore/off-shore delivery model. This is not surprising. Traditionally CPG companies have solved these issues with new hires as opposed to other forms of investment. And a mixed on-shore/off-shore delivery model was seen as a low-cost fix.
Sure, this solution provides an easy, quick fix in the short run, but in the long run, it’s sub-optimal and risky. It’s incredibly time consuming to scale a resource-heavy mixed delivery model across multiple categories and markets. The situation will only exacerbate with the addition of digital and social media data. Further, with a reliance on large numbers of employees, this solution is slow and error-prone.
Employee turnover and the resulting loss of residual knowledge also inhibit growth. Most importantly, increasing hires does not provide a competitive advantage to CPG companies. This solution is easily replicable and doesn’t generate any intellectual property.
So what can CPG companies do to fill these gaping holes and set themselves up for the future? And how is this achievable given the already constrained budgets and tough economic situation?
Transforming analytics capability probably seems like a herculean task.
But in reality, the next generation solution is neither time consuming nor expensive. Companies can build a strategic competitive edge by combining data and technology. By using cutting edge technology intelligently, CPG companies can successfully leapfrog into the future.
- Embrace Technology as a philosophy
Technology is the focal point of execution. Advances in technology have been so rapid that most of the tasks that once required large teams can be now be automated.
Besides Big Data and Visualization technologies, Artificial Intelligence (AI) has become a disruptive force that challenges existing business solutions. New age technology manages all standardized simple-to-medium-complexity reporting and analysis tasks.
Whether it’s data harmonization or generating business performance and KPI reports, today’s technology platforms can readily automate these tasks. These tasks constitute 80% of all activities and deliver incredible time and cost savings.
Plus, AI can be trained over a period of time to handle more complex business issues.
Let me paint you a picture. Imagine a scenario where you walk into your office and the technology platform flags business performance issues, automatically undertakes a root cause analysis, highlights the issue area, and provides decision options to solve the issue.
Now compare this with the current systems you have to get a sense of the far-reaching impact technology can deliver for your business. It’s fast, reliable, scalable, less expensive, and allows your managers to focus on strategy, decision making, and implementation. Welcome to the future!
- Use people as a precious resource
Build lean and effective teams for high complexity tasks that technology cannot automate or execute. Good talent is hard to find and retain. Build on-shore teams for strategic thinking and insight generation. Create off-shore teams for executing complex reporting and maintenance of technology.
The mantra is to embrace technology as a core philosophy. Build people, process, and systems around a technology solution. Make technology your mainstay to make quicker and smarter decisions.
Otherwise, you will be left grappling with a large legacy model providing sub-optimal outcomes that is expensive to maintain and not at all geared to handle new age digital data.
Authored byÂ B. Srinivas,Â Associate Director at Absolutdata