How CPGs are using data and analytics to drive change and value

Two weeks ago, we dug into the question of how data and analytics enables consumer packaged goods (CPG) enterprises to unlock innovation with a group of over 40 CPG visionaries at the CGT Analytics Unite conference in Chicago. We asked the CPG leaders to organize themselves by functions and select two to three data and analytics use cases per group. The groups then worked backwards to the key actions, measures of success, breakthroughs, and blockers for each use case. Finally, we gave everyone three mock $100 bills to “invest” in the use cases that they believed had the best chance to move the needle forward for their organizations.

The results of our casual experiment brought some exciting insights. As someone who spends her day listening to, working with, and building solutions for CPGs, I found the conversation invigorating. Nearly everything we learned from the room corroborates what we are seeing in the marketplace and across our conversations with customers.

Specifically, the following use cases received the most votes:

Building supply chain resiliency through optimizing on-shelf availability
Serving the consumer as a market of one using geo data in targeting and personalization
Responding to inflationary market pressures by optimizing product assortment and distribution
Acquiring, harmonizing, and enabling data as part of democratizing data for self-service analytics

It’s no surprise that what CPGs and retailers are thinking about lines up with major headwinds in the market. But when we asked them how they think about driving change and value, we uncovered some important nuances:

A cross-functional, collaborative approach is needed across the enterprise…

Though we started the discussion organized by functions, almost every use case that emerged required meaningful cross-functional collaboration. For example, not promoting products that are out of stock or struggling to procure raw materials for a product that has already been sold into retailers. This is easier said than done for CPGs that have historically built successful brands while operating in functional silos – it is simply not in their DNA to think cross functionally and there is an incredible amount of inertia standing in the way of progress. Even though CPGs are building bridges across functional silos more and more every day, particularly in the areas of sales and marketing when it comes to ecommerce, we are still far away from tearing down these barriers altogether.

…and beyond the four walls of the enterprise

One of the “a-ha” moments came when a retailer simply realized that she had access to consumer

data that CPGs wanted, but did not have. While sharing might be happening in pockets, there was resounding agreement in the room that no systemic models for sharing granular consumer data in near real-time between retailers and CPGs exist. As a result, CPGs are making do with lagged and incomplete point-of-sale (POS) data to draw insights that, amongst other things, drive category management discussions with retailers. This is where utilizing solutions such as data clean rooms that allow for better targeting and personalization in a privacy-safe way has the potential to drive a step change in what joint business planning looks like between retailers and CPGs. This allows both parties to capture more of the value that is currently left on the table.

Data democratization may start with a system, but needs to quickly drive changes in (and change management of) processes and people

We heard unanimous support for the concept of data as an asset and as a currency for driving value. Most CPGs are exploring data catalog, library, and mesh technologies that democratize access to and use of all sorts of data (production, shipments, POS, brand sentiment, third party, and more). However, a common blocker across each use case depends on shifting the culture and the mechanisms to support a more data-driven approach to doing business overall.

We are not at ground zero in the CPG industry when it comes to instilling a data-driven culture. Gone are the days when marketing decisions were made based on tribal knowledge or when inventory planning decisions were made on intuition. However, we are still far from the top as CPGs are managing virtually all key decisions from sourcing, procurement, quality, trade, and marketing on offline Excel spreadsheets that pull data from various systems and stitch it together with unique assumptions that often yield conflicting insights from the same base data. This can lead to suboptimal decisions and frustrated employees. This is where CPGs need more focused efforts to communicate the value of moving off spreadsheets with one-off analyses and instead drive adoption of scalable, repeatable data and analytics solutions that power insights in perpetuity.

Big brands need more repeatable mechanisms to test and learn…

No one in the room was a stranger to the mantra of “start small and scale fast.” The main issue is having the capability to experiment quickly and consistently. The discussion revealed frustrations with measuring return on investment (ROI), getting approvals to experiment without impacting the core business, and navigating the high bar and long process that comes with getting a business case approved. Still, CPGs are excited about solutions like digital twins and A/B testing capabilities that could help them to test and learn more effectively and efficiently.

…while also finding ways to balance the experimentation with scaling for value

As one table said, “everything comes down to value generation.” To me, value generation isn’t only about pilot key performance indicators (KPIs) that balance cost optimization with benefit maximization. Value has to be sustainable for a longer term. One thing that I saw frequently during my consulting days was a failure to move from minimum viability to maximum value. While many CPGs successfully create minimum viable products (MVPs) by experimenting within certain functions, geographies, or brands, they don’t make investments in scaling to maximum value products by creating reusability and scaling through flexible data models, integrated data fabrics, and cloud-based technologies.

To close, allow me to offer a point on solutions. For us at AWS, this rich customer insight allows us to work backwards from your needs to identify new CPG and retail solutions in the areas where you need to accelerate time to value and where repeatable industry solutions can lift the tide for all. We’ve been busy at work curating a portfolio of AWS and AWS Partner solutions such as:

Data Fabric/Data Mesh
Supply Chain Control Tower
Demand Forecasting and Planning
Energy Optimization and Sustainability
Customer Data Platform & Personalization Engine
Omnichannel Contact Center
Direct to Commerce Suite
Retail Execution Technologies, and much more

These solutions pre-assemble AWS services and partner offers in a way that reduces the undifferentiated heavy lifting and accelerates time to value for key business use cases. In turn, this allows CPG customers to focus their investments on truly market-differentiating innovations.

If you have a business problem and are looking for some thought partnership in putting your arms around a solution, don’t hesitate to reach out!