CPG Partner Conversations: Supply Chain Planning Transformation with Noodle.ai
The COVID-19 pandemic created unprecedented disruption. In a matter of days, our world turned upside down. As shelter-in-place lockdowns, mask mandates, and social-distancing rules took hold, new patterns of consumption quickly emerged. Arguably, no industry felt the pandemic’s dramatic impact more than consumer packaged goods (CPG). However, leaders are forging ahead with resilience, tenacity, and innovation. We’re engaging in conversations with executives from AWS’s strategic partners serving CPG companies, hearing their thoughts on leadership and innovation as they manage through this disruption and beyond. We hope you enjoy our blog series. If you have questions or suggestions, please post a comment.
In this installment of our blog series, “CPG Partner Conversations: Leadership During Unprecedented Disruption,” we chatted with Steve Pratt, CEO and Founder at Noodle.ai, a leading AI-as-a-Service software vendor selling enterprise artificial intelligence applications to manufacturing and supply chain companies. Noodle.ai has a not-so-secret plan to create a world without waste. Steve shares his thoughts about moving forward with agility to manage through the current pandemic and insulate your supply chain from disruptions down the road.
AWS: Help our readers understand your vantage point. What’s the space you play in, and with what type of CPG executives does Noodle.ai interact?
Steve Pratt, CEO, Noodle.ai: Noodle.ai is an enterprise software company selling breakthrough planning products to product operations executives, solving their most valuable and consequential planning and production issues across their supply chain. Our Athena Supply Chain AI Suite provides advanced planning tools powered by artificial intelligence for some of the world’s largest CPG companies. Our solution enables companies to reduce lost sales, manage inventories, and improve demand forecasting accuracy. The end-users of the applications are demand, inventory, and supply planners, and data output from the solution allows them to make better decisions within the zero-to-thirteen-week execution window. It also enables executives to have better strategic dialogue with their planners.
Noodle.ai interacts with three types of execs:
- The C-Suite (e.g., CEOs, COOs, CIOs, CTOs, CFOs)
- Digital transformation leaders (e.g., CDOs)
- Line of business leaders (e.g., EVPs, SVPs, VPs of Supply Chain and Global Operations)
AWS: CPG companies have been managing through unprecedented disruption. What have been the biggest challenges for your customers?
Steve Pratt, Noodle.ai: As the pandemic grew, legacy planning systems and processes struggled to keep up. Most companies relied on the expertise of seasoned planners to manually plan large parts of their supply chains. This created enormous stress on both planning teams and individual planners. While these challenges are not new, the added volatility of the COVID-19 pandemic made the situation even more difficult.
The Noodle.ai Athena Supply Chain AI Suite addresses precise supply chain pain points:
- Low or inconsistent fill rates for customers – On average, companies target achieving only 85% to 95% fill rates, leaving 5% to 15% of demand unmet.
- Excess inventory – Many consumer companies still have pockets of their portfolio with too much inventory because they haven’t been able to balance against actual demand.
- Expedite costs – Premium freight and air shipping is costly, and these costs go straight to the bottom line. We’ve conducted studies and discovered that half of the airfreight shipments never get to customers, so it was a complete waste of money.
- Planner burnout – Many CPG executives are genuinely concerned about the manual nature of the planner’s role today, driven by the shortcomings of traditional planning tools. By adopting advanced planning tools, like Noodle.ai, planners can find more fulfillment in their roles by shifting from manual tasks to more “value-added work”.
AWS: How do you see CPG companies adjusting their current operating environments to changing market dynamics and consumer expectations?
Steve Pratt, Noodle.ai: Early in the pandemic, many CPG companies simplified their portfolios to improve throughput on crucial products, and they also leveraged external manufacturers more significantly. While trends may have appeared simple on the surface, numerous challenges existed in the details. Demand for some products spiked while demand for others declined; channel sales shifted rapidly, and retailer order patterns changed dramatically.
However, what’s become abundantly clear is that supply chains need new, more agile approaches to cope with volatility in demand and supply planning. We do not know any companies that believe everything will return to “normal” in 2021 or beyond. That’s because consumer behaviors have changed in ways that will likely continue. We are proud of our contributions to help global CPG leaders manage their supply chains during this challenging operating environment.
AWS: The CPG industry is incredibly resilient. As you look toward the new normal, what role do technology and the cloud play for CPGs? How do you see technology enhancing the way CPGs make, move, or market their products?
Steve Pratt, Noodle.ai: Global CPG leaders spent decades capturing and organizing data (e.g., data lakes), building capabilities, and feeding planning systems that blew up in an instant in 2020. The pandemic exposed the frailties of systems that worked well during periods of stability but faltered with the unprecedented volatility. Both on the
demand and supply sides, companies—especially those experiencing spiking demand—had trouble getting products to consumers. These are not new challenges, but the pandemic made them more acute.
Like the Athena Supply Chain AI Suite, advanced planning with AI is purpose-built for predicting outcomes and recommending actions in extremely volatile environments. Athena can quickly analyze lots of internal and external data to sense, predict, and recommend actions based on the probability that specific outcomes will occur. The goal is to empower people, and our solution, combined with data-driven intelligence, can build a sustainable competitive advantage. We firmly believe CPG industry leaders are willing to invest in technologies that can help solve critical challenges.
AWS: With the current CPG industry disruption, how is your company innovating to respond to changes?
Steve Pratt, Noodle.ai: The pandemic accelerated the development of innovative supply chain capabilities. Technologies that might have taken five years to develop have evolved much more rapidly—in 12 to 18 months. In the early days of COVID-19, one of our CPG customers leveraged our tools to understand their portfolio’s fundamental behaviors so that they could optimize production. Their other planning tools were failing them to the point where they shut off their statistical models. We helped them gain control of the situation by predicting which SKUs would continue to spike, decline, or normalize.
AWS: There is much talk about a “new normal” going forward. What does this “new normal” look like to you, and how do you think the CPG industry will look three years from now?
Steve Pratt, Noodle.ai: For the last decade, most companies focused on reducing supply chain costs. However, the pandemic created such volatility that we saw unprecedented demand for some products, like food and cleaning products, while other categories suffered significant declines. Going forward, agility will be critical to managing similar points of volatility, and CPGs will need to invest in technologies to become nimbler. Of course, reducing costs will always be incredibly important, but CPGs will need to balance their priorities so they can quickly adapt to any situation.
I also think CPGs will focus much more on sustainability, like carbon footprint, recyclability, etc. Noodle.ai’s mission is to help our customers reduce waste by running more radically efficient operations.
AWS: What makes you excited for the future of CPG?
Steve Pratt, Noodle.ai: Most CPGs are focused intently on building more resilience into their businesses, under intense competitive pressure of late. As a recent McKinsey study stated, “After 40 years of outperformance…the global consumer packaged goods (CPG) industry struggled to grow over the last decade. Why? Because 12 disruptive trends have diluted the old success model for growing mass brands. Now the COVID-19 crisis is amplifying many of these trends, triggering an industry imperative to change.” They have been forced to seek innovative ways to build strong financial performance and meet ever-increasing consumer expectations for service and satisfaction. There is a more balanced view between growth and cost-efficiency. In some ways, CPGs have a new lease on life. Now people are saying, “Wow. I value X brand.” It’s a shot in the arm for some brands, and they can build on that.
Also, CPG leaders have a new appreciation for their essential workers—from people in production plants to truckers getting product to market to people working in grocery stores. It’s great to see.
AWS: Thanks for chatting with us, Steve. We appreciate your insights and expertise.
If you have questions for Steve, Noodle.ai, or AWS, please comment on this blog or visit Noodle.ai and request a demo.
Steve Pratt, CEO and Founder at Noodle.ai, is an instigator, agitator, and pioneer in creating world-class technology services organizations. He has spent his career building innovative ways to create value for the world’s most important organizations. Prior to Noodle, Steve was responsible for all Watson implementations worldwide for IBM Global Business Services. He also was the founder and CEO of Infosys Consulting, a Senior Partner at Deloitte Consulting, and a technology and strategy consultant at Booz, Allen & Hamilton. He twice has been selected as one of the top 25 consultants in the world by Consulting Magazine. He has Bachelor’s and Master’s degrees in Electrical Engineering from Northwestern University and The George Washington University, focused on Satellite Communications.