In the consumer packaged goods (CPG) industry, speed is key. Few other industries operate in as dynamic an environment as CPG, with the challenges of responding to consumers’ fickle tastes, rivals’ promotions, and swings in price levels, making it one of the fiercest marketplaces.
There is intense competition for consumer loyalty in the sector, more so than ever thanks to the increased power that the consumer now has as a result of digital innovations. This means that CPG companies must be able to draw ever more consumer insights from Big Data to make quicker, fact-based decisions.
One of the principle benefits of Big Data is that it enables necessary changes to be conducted at the kind of speed that CPG requires. The wealth of knowledge about consumer behaviour it brings is particularly driving insights that can be leveraged in the supply chain. Scenario planning is something being used across CPG, with Tesco in particular an acolyte to its benefits. Scenario planning facilitates the delivery of precisely the correct type and amount of inventory to the right store at the right time, slashing the risk of being left short or being overstocked. It can look at factors such as the weather, to find out what impact this is having and adjust stock according. They can also respond quickly to any drop in demand in specific areas, by either adjusting prices or putting offers in place.
CPG companies are still not adopting Big Data to the levels they should be though. A report from the Grocery Manufacturers Association (GMA) and Deloitte Consulting LLP, titled Formula for Growth, found that over the course of the past decade, relatively few CPG firms have seen much advance beyond their use of localized analytics capabilities, and their relatively small stores of internal and structured data.
There are challenges to overcome if a CPG company is to adopt Big Data. CPG manufacturers must take into consideration customer’s desire for privacy, as any over-personalized promotions risk implying an uncomfortable level of surveillance. They must also put in place the kind of talent that can deliver the insights that are needed to gain a competitive advantage. Knowledge of consumers must be deeper than ever, and understanding the reason consumer sentiment is what it is, and what’s driving purchasing levels, is equally as important as knowing what the numbers are if the right changes are going to be made and success sustained.
To learn more about this topic, attend the CPG Forecasting & Planning Summit in Chicago on October 21 & 22. For more information see here