What is Digital Transformation?
In our digitalized world of today, technology and automation has taken center stage in every field and walk of life. By providing unimaginable transformation opportunities, technology is now the biggest driving factor behind the success of any business or industry.
Digital transformation is an amalgamation of digital technology into all business capacities, bringing forth vital changes in the operational model of a business and the resulting value that the business delivers to its customers. But what is the role of digital transformation in the Consumer Goods industry? How do AI/ML and cloud-based solutions help with data aggregation, analysis, and an improved customer experience? Let us find out!
The Role of Digital Transformation in the Consumer Goods Industry
In a dynamic environment, every business needs to re-think its operating model to leverage success, and the consumer goods industry is no exception to the rule.
Traditionally, the CPG industry was not quick with new technology adoptions. However, the recent COVID-19 pandemic and a rapid shift towards cloud-based technologies, and integration with AI/ML tools and IoT devices is forcing the CPG industry towards a digital transformation. The new normal of social distancing and working remotely are changing consumer behavior as well as their demographics. Fortunately, the combination of advanced analytics, MI and cloud-based technologies bring a ray of hope during these trying times for the CPG industry.
Let us now peek into how various technology trends are shaping the CPG industry and helping it reach its digital transformation goals.
Technology Trends and How They Are Helping with Digital Transformation
Rethinking business models and forgoing traditional ones lies at the heart of any digital transformation. The past few years had seen a shift in the CPG industry where companies like Amazon rolled out tests of Amazon Pantry which allowed Prime users to gain a selection of thousands of packaged pantry items all delivered for a nominal fee. Other big brands like Campbells and local groceries have also been joining the bandwagon to enter the digital transformation path.
Also, the COVID-19 pandemic caused the integrated supply chain to experience an even bigger shift where traditional operations were not enough to sustain the demand for consumer goods. Therefore, advanced analytics and MI became a necessity for the entire CPG industry.
At its core, digital transformations can involve various technologies to support a diverse set of customers and operational requirements. However, there are six leading technology trends that reign supreme in the world of digital transformations and are namely: Cloud Computing, Internet of Things (IoT), AI/ML, Mobility, Analytics, and Social Media.
Now let us look into how the CPG industry is benefitting from these technology trends in their quest for a digital transformation.
Aggregating Data and Analysis from Multiple Sources
Per the recent Retail and Consumer Goods Analytics study, 70 percent of Consumer Goods companies believe their biggest challenge is data integration from multiple sources. This gravely affects their success rates as valuable insights are needed to make mature business decisions that can only be accumulated from multiple systems, sources, and external business partners.
However, by utilizing the power of AI and advanced analytic options, businesses can now gather data from multiple sources easily, compile it and produce actionable insights from this data as well. Thanks to AI and advanced analytics, companies can now observe trends for demand forecasting, Trade Promotion Management, sales activation, Dynamic pricing & promotions, precision marketing, personalized consumer engagement, and AI-powered diagnostics & and recommendation services.
Leveraging AI/ML and Cloud Technologies to Achieve Results
During research conducted by McKinsey&Company, it was observed that organizations with successful digital transformations are the ones that invest heavily in new and upcoming technology. This includes AI and Machine Learning as they have the power to transform traditional business models and processes and convert them into futuristic enterprises. Here are some ways AI/ML help accelerate the CPG industry:
- Machine Learning can process 10s of 1000s of data points in real-time without any human intervention. For example, if a customer is shopping online, through AI/ML, they will only be presented with offers related to their current search thus creating a more personalized experience for them.
- A great advantage of machine learning is the ability to analyze vast amounts of data instantly and much more efficiently than manual interventions. This streamlines the digital processes and aids in making informed decisions due to the ability to discover various relations in your data sets.
- Another way the CPG industry is benefiting is by leveraging cloud-based technologies and the resulting baseline predictions into their business models. As an example, the AWS cloud is offering CPG businesses with great investment protection across the value chain. Ranging from AI/ML-powered smart factories and supply chain to data-driven marketing and personalization, these cloud solutions are building meaningful experiences for consumers and helping the CPG industry grow.
Using IoT to Access Vast Amounts of Data
Even though the CPG industry is still playing catch up with other industries that integrated IoT into their operations years ago, it is not far behind. Traditionally, the CPG industry relied on retailers to provide them with audits and insights to understand consumer behavior. But now a shift towards IoT has opened many doors for instant and direct customer interactions. As such, IoT can help gauge these insights via the following processes:
- Data analysis from smart sensors to gauge the best selling and most popular product among the customers.
- Seeing which retailer sells to more consumers when compared to other retailers.
- Utilizing sensors to analyze customer behavior patterns that help in advertising products in the best of places.
- Creating apps to sell products along with sending discounts and promotions directly to the customer and eliminating the middleman.
To survive the competition and adapt to the changing shape of events like the COVID-19 pandemic, the CPG industry needs to be able to scale its operations. Factors like talent gap, data governance, validation, and market specificity should be taken into consideration when scaling your Consumer Goods business. Fortunately, with the help of advanced analytics and MI, these scaling factors and future predictors are taken into consideration as well.
Digital Transformation – A Much Needed Push for the CPG industry
Digital transformation is the new necessity for the CPG industry to compete and survive in the fiercely changing world of today. Fortunately, digital transformation is forcing the CPG industry to part with old ways of doing business and adapt to the new market reality. Whether it is developing IoT solutions, using the power of smartphone technology, incorporating AI/Machine learning into your day-to-day operations, utilizing Big Data approaches, or leveraging cloud computing into your current infrastructure – technology is finally coercing the CPG industry towards a digital transformation.