3 Data Architecture Needs for the Consumer Packaged Goods Industry
Access, speed, and bidirectionality are key requirements when building a data architecture for the consumer packaged goods industry.
- By John Joseph
- November 6, 2017
Enterprise digital transformation has been a hot topic with IT and business leaders over the past several years. The impact of digitization cannot be understated, as companies of all sizes can use this shift to leapfrog their competitors. Organizations that embrace being digital will thrive, grow revenues, cut costs, and be more profitable. Those that do not will struggle to survive. It is a black-and-white choice.
For companies that manufacture and distribute consumer packaged goods (CPG), digital transformation means finding new ways to tame a perfect storm of dispersed operations, time-sensitivity, shifting buyer preferences, and ultra-tight margins. Digitization holds the promise for these companies to meet the needs of customers (by opening new channels for communication, service, and sales), improve operational efficiency, and close critical internal information gaps.
At the heart of digital transformation, however, is data -- the unprecedented volume of data from an unending trail of sources -- and it is finding the right means to harness that data that most confounds CPG leaders. The issue boils down to a constantly moving target of marketing channels, misaligned legacy systems, and cloud applications and, quite simply, unpredictable customer whims. In fact, it sometimes seems a feat of miraculous thinking to believe these organizations could ever adapt fast enough to succeed.
Orion Global Solutions, a partner of Scribe Software that serves brands across the consumer packaged goods and manufacturing landscapes, boils the CPG industry's data architecture development challenge down to three basic needs: data access, timely analytics, and data sharing in two directions.
Requirement #1: Data Access
Orion CEO Yacov Wrocherinsky explains that sales representatives at most CPG companies operating in the field often have infrequent access to data. Even if they can get to the data, their access may be limited to certain applications such as CRM. In some cases, this means they cannot access data such as whether a customer's order has shipped. They might not be able to access a customer's order history, which would be invaluable information if they are, say, meeting with that client this afternoon or they receive an unexpected call from that customer.
With access to that client's order history and status, as well as external trend data coming in from the client's peers, however, the salesperson is able to present how the effects of price discounts, promotions, product bundling or other trends have played out across regions and products. Instead of just letting a retail buyer dictate the discussion, the salesperson now becomes a trusted consultant who does more than simply take orders and deliver goods. Now they are viewed by the retailer as a sales partner or strategist that can help put that retailer in a more competitive position.
In the food service business, for example, providers can use data to help restaurant owners spot the products that are clearly selling more from their establishment, and become more strategic about menu planning based on those implicit customer preference trends. Conversely, the salesperson can become a customer's eyes and ears to help eliminate products from their orders that aren't selling.
Requirement #2: Speed
Field representatives need data, certainly, but access isn't enough. Representatives need the data at their fingertips and they need it fast.
It can be difficult for CPG companies to combine data sources fast enough to provide adequate consumer value in a world that thrives on instant gratification. Make no mistake, the new currency of business is speed, and the rewards come to those enterprises that act with urgency.
Unfortunately, ensuring information gets delivered to a resource who can take action is a particularly tough challenge for CPG companies, where sales representatives are on the go and digital devices such as iPhones and iPads are typically their sole link to the office. A renowned regional bakery recently took this challenge on when it worked with Orion to connect its CRM, ERP, and Salesforce applications together, then push the combined data streams to workers' mobile devices.
As a result of the initiative, this bakery's sales representatives now receive real-time data from SAP and Salesforce about promotions and customer status, respectively, the moment they enter a customer's store. No longer are they stuck waiting for data. Instead they are able to make strategic decisions about product placement and promotion in real time. Results have been noticeable, with increased sales representative efficiency, better product penetration, and a 9 percent increase in cross-sell and up-sell rates.
Requirement #3: Two-Way Data Sharing
A third key requirement in the CPG industry is data bi-directionality -- the ability of salespeople to provide feedback to corporate headquarters about what they are seeing in real time so the business can respond. Field data is essential for companywide initiatives to optimize revenue, processes, and programs. When sales representatives can provide insight gleaned from their "rounds" with product planning personnel, the information can help planning, management, and tracking, which will often improve the sales outcome of product promotions.
In the bakery example, the home office rewards its field teams for sending images that show where products are positioned, which they compare to time-limited sales levels and then adjust if necessary. The bakery even spotted an opportunity to realign its sales territories to be more efficient and saw a double-digit percentage in revenue increase within a matter of months.
Moreover, in the case of food manufacturing, where goods are perishable, it is critical for the home office to know instantly whether goods have been delivered to the right place at the right time and whether replacements are needed. Such data could mean the difference between a loyal and a lost customer. As an example, consider product shortages due to recalls during the Christmas or other high-demand season. If you are in the business of delivering such products, you need to be able to simultaneously contact all current and potential customers immediately while sourcing a replacement. Similarly, a CPG manufacturer must be able to contact customers quickly and find alternative sources if they rely on an ingredient coming from an area affected by natural disaster. The mere act of demonstrating active pursuit of a viable solution quickly builds customer loyalty. Doing so relies on two-way exchange of data.
On the whole, digital transformation in the consumer goods industry is about finding new ways to instantly spread actionable information among sales representatives in the field, customer service representatives in the call center, product managers, finance team members responsible for credit and billing, and the manufacturing and operations teams responsible for producing and distributing product. This action breeds measurable impact on long-term customer retention and loyalty, and a company's bottom line. Industrywide, the impact equates to reported 45 percent increase in sales pipelines, 44 percent increase in sales productivity, and 37 percent increase in sales revenue according to "Manufacturing Meaningful Consumer Relationships," a Salesforce.com e-book.
John Joseph is vice president, marketing at Scribe Software, where he is responsible for managing the company’s corporate marketing, demand generation, partner marketing, and product marketing initiatives. He holds a Bachelor of Science degree in electrical engineering from the Massachusetts Institute of Technology (MIT), a Master of Science degree in electrical engineering from the University of Southern California, and a Master of Business Administration degree from MIT’s Sloan School of Management. You can contact the author via email or on LinkedIn.