When the economy is volatile, it’s easy to see that there are more unknowns than usual, and any investments in your business can feel risky. Yet, you also know that doing nothing is not a winning strategy, because you’ve seen reports like this one from McKinsey & Company that point out:
“A look at past recessions makes one thing clear: companies can’t just sit and wait. Companies that outperformed their peers through and beyond the 2008 recession moved harder and faster on productivity, took action to preserve growth capacity, divested more heading into downturns, acquired more as the recovery started, and created operational and financial buffers.”
Investing in your business in uncertain economic times can be, candidly, unnerving considering recent bank failures and geopolitical turmoil. Those events and more have translated into things like devaluation of the dollar, global inflation, tight labor markets, increased input costs, supply chain volatility, and consumers continuously changing their buying habits. That’s a lot to digest and it’s not even a complete list. The hits just keep on coming! As a result, the more dynamics we have to contend with, the more trepidation we feel in our personal lives and our businesses.
The CPG business has always been a grind. But, as the saying goes, where there’s a will, there is a way. The good news is that, at any given time, opportunities are right in front of us. Right now, for instance, you know that you need to focus on digitalization to get more out of your data, and you need to automate to become more efficient. You also know that putting it off can often lead to higher costs, whether it’s the potential for losing market share, inefficient supply chains, talent retention, or a multitude of other significant business factors. It’s tough to ignore the consequences of an uncertain economy. So now what?
Let’s start by looking at ways to get more out of your data so you can address these challenges one at a time.
Internal Trends and Predictive Analytics
I don’t know about you, but when I walk into a supermarket, I’m shocked. Being in this business for over 30 years, I have never seen this level of degradation in service levels (i.e. empty slots on the shelf) and costs. Anyone buy eggs lately? Everything we do in our industry starts with the consumer and ends with the consumer.
Let’s start by looking at what we know or should know as consumers navigate their way in the new economic reality. Information and data are assets, just like any other investment. You as a CPG manufacturer can harness that consumer insight to predict future outcomes based on a complete 360-degree view of what makes your consumers tick. The analytics you can glean from your data can tell you much more than you think, and connecting consumer insight into operational processes gives you an advantage—agility.
A connected view can help you map customer journeys and identify overall trends related to demographics, buying channels, and product types. Then you can work toward delivering a higher rate of successful outcomes by delivering the right product, for the right purchase occasion, in the right channel. In today’s ever-changing world of consumer purchase behavior, insights from data allow you to anticipate future needs and offer more personalized experiences that drive demand and customer loyalty.
To do that, you can use this same connected view of your data to identify new opportunities and simulate the impact of business decisions, factoring in both internal and external market dynamics—particularly those beyond your control like changing FDA legislation, supply chain bottlenecks, or volatility in raw material costs. The key is to focus on the most likely scenarios. This will help prioritize the products and value-add services most likely to generate the biggest payoff and to rationalize eliminating anything non-beneficial. In short, this is the most important tool you have to help you make the most informed decisions.
Where and How to Grow
I grew up in business as a data geek. Back then, demand insights were bi-monthly audit books for consumer takeaway, and the rest was all about shipments. How we did demand forecasting would make us all cringe in today’s world. Today, while the data available is much more robust, we as an industry are still just scratching the surface to maximize its utility. Technology helps put external data sources like market research, social media, and the like into better perspective. It provides a great opportunity to allow you to focus more on your unique value proposition and meet the ever-changing demands of your consumer.
All of that being said, where do you start? You start with an honest assessment of your data and your ability to turn that data into insights. Candidly, legacy systems just don’t perform at the level you need in order to arrive at these insights, and the companies that grow despite economic headwinds are the ones that look at the data through an opportunistic lens because somewhere, in that pile of data, is the next big idea! I’ve worked on many teams to deliver successful technology roadmaps to drive the growth agenda via data and insights.
Make no mistake. Your data is an asset, and an often underleveraged one. Take advantage of it! It is your ticket to optimizing costs, identifying underperforming assets, and increasing efficiencies across your organization.
Get excited! As an industry, we’ve never seen so much growth potential with consumer dynamics, sustainable practices in a networked economy, and beyond. It’s a great time to be in CPG and the opportunities are limitless.