Last Updated: June 28, 2021
On May 18, 2021, Coresight Research hosted an online event in conjunction with Prevedere. In the event, Deborah Weinswig, CEO and Founder of Coresight Research, and Rich Wagner, CEO and Founder of Prevedere, discussed the current pandemic-impacted CPG landscape in the U.S., how CPG companies should view and leverage demand forecasting, and the importance of the digital customer experience. This blog recaps the webinar and highlights the key points from the discussion.
Throughout the last year, the U.S. CPG industry has faced unprecedented challenges in demand planning and forecasting. COVID-19 has forced massive changes in consumer behavior and created a challenging physical retail environment with ever-changing business restrictions and shutdowns. Moreover, E-commerce has accelerated as consumers look to online channels to make most of their purchases, including their regular grocery shopping. At the same time, the pandemic has brought supply chain disruption, which has added to the mounting challenges the CPG industry faces in demand planning. In the webinar, Wagner referenced a leading manufacturing client’s internal study that every 3% of wrong data predictions leads to over $9 million in inventory made obsolete—a sizable amount that could have been used for working capital investment instead.
Given the increased uncertainty, volatility, and challenges to forecasting demand, Wagner highlighted the need for intelligent forecasting that leverages artificial intelligence (AI) and machine learning (ML) to inform accurate decision-making. Weinswig further explained that AI and ML can address challenges in analytics, enabling companies to uncover patterns in data and monitor production and supply planning in real-time. According to a 2020 RIS survey, 60% of CPG companies are using these technologies globally.
While the need for intelligent forecasting supported by AI and ML is increasingly clear, both Wagner and Weinswig stressed the need to use these tools in the right way. In particular, Weinswig explained that it is important for companies to have a single source of truth—making forecasting decisions based on just one data source facilitated by AI and ML solutions. Wagner added that companies must ensure they capture the right data in the first place and augment that single source of truth with industry understanding to derive accurate insights effectively. Moreover, given the current pace of change, it is no longer sufficient to hold annual planning meetings. Instead, it is increasingly common to see CPG companies hold weekly meetings to boost agility in this era of rapid change.
In addition to more frequent planning cycles, Wagner explained it can be beneficial to produce three scenarios, including optimistic, baseline, and pessimistic, to account for demand and supply chain disruption. CPG companies also need to cater to changes in external factors—for instance, raw material and gas prices—considering how they would affect consumers. These types of changes in the forecasting process can enable CPG companies to be more agile and resilient in the face of unprecedented change.
Even beyond demand forecasting, Wagner and Weinswig explain the multitude of ways that AI and ML can benefit CPG companies. Amidst the current digital revolution, providing the best possible digital experience to customers is essential for CPG brands and retailers. Because of this, online investments in improving the e-commerce experience through advanced technology are of paramount importance in retaining loyal customers as well as attracting new ones.
Ultimately, fast processing of customer data is a core benefit of AI and ML, helping CPG companies to spend their time being more strategic. They can also use insights from these technologies and systematically incorporate external data—including customer behavior and economic conditions—to better drive personalization. Going forward, investing in intelligent forecasting and leveraging the power of AI and ML can provide CPG companies with the tools necessary to navigate an increasingly volatile and changing world.
Click here for the complete discussion available on-demand. >>