April 23, 2019
It’s no secret that Consumer Goods companies, particularly long-standing industry incumbents, are facing considerable disruption and an uncertain future. As popular retailers like Amazon continue to launch their own private-label brands, and the number of small, agile companies that sell direct-to-consumer (D2C) continues to explode, companies that do not embrace innovation and customer-centricity will be left behind.
The disruption of traditional value chains and emergence of new, customer-centered ecosystems
Innovation for CPG companies centers around becoming more customer-centered—and hence—more agile. Consumer expectations and needs change quickly, and every lost efficiency or misguided consumer insight quickly translates to lost business. A truly customer-centered brand can quickly respond to–and even, predict and shape–the needs of their customers. In turn, these brands are the ones who grow customer loyalty, advocacy, and most importantly, NEW business.
Here are three ways CPG companies can become more agile, customer-centered organizations:
- Understand The End Customer Through Data
It is impossible to become a more customer-centric organization without transparency into end customer behavior and insights. CPG companies need to fully understand their end customer to both target and engage consumers with greater precision, but also to inform their product roadmap.
However, because many consumer brands do not sell direct to consumers, they tend to lack visibility into their end customer. It is often the retailer who owns much of that customer data and behavioral insight. Add to this challenge the vast and complex networks of retailers and resellers who sell a brand’s products through many different channels, plus the many touchpoints along the customer journey in which a retailer and the brand itself may be engaging with a customer, and you have a massive data gap.
Many CPG companies are now going D2C because they want more exposure to their end customer and they want to own their customer data. While this can be a successful strategy for many companies, it is not right for everyone, and requires a delicate balance not to upset their primary business activity or compete directly with their other channels.
Whether a CPG company sells D2C and/or B2B through a network of wholesalers, retailers, and resellers, leveraging a centralized, cloud-based, and highly flexible customer engagement platform like Salesforce can solve many data challenges, bring a brand closer to its end customers, and become a more agile organization.
Salesforce supports the entire value chain with connected experiences across the customer journey. Salesforce Commerce Cloud is an industry-leading B2B and B2C digital commerce platform that brings digital innovation, agility, and transparency to the B2B buying experience and aligns it to the end customer experience.
In addition to B2B Commerce for the business buyer, a brand can use Salesforce Marketing Cloud and Service Cloud to engage with and serve their end customers, and Salesforce Customer 360 to create a single, unified customer profile that’s informed by every touchpoint across the marketing, purchase, and service experience.
Finally, the Salesforce MuleSoft data integration layer enables CPG companies to connect to a variety of first, second, and third-party data sources to collect insights about their end customers to inform engagement strategies.
- Improve Logistical Efficiency and Optimize the Supply Chain with AI
CPG companies operate with razor thin margins and sustained growth is dependent on the ability to measure and manage logistical cost. Pair this with the large, intricate supply chains common to many CPG companies and the plethora of new logistical challenges introduced by growing eCommerce demand, and it’s clear that an agile supply chain is truly the key to an agile, customer-centered business.
In the face of rising complexity, Augmented Intelligence (AI) has become a pivotal resource for supply chain optimization. By 2024, it is estimated that more than half of consumer products manufacturing organizations will rely on AI platforms to drive digital transformation across their supply chain, leading to productivity gains of over 20%.* Similarly, almost 80% of consumer products companies plan to use intelligent automation for supply chain planning by 2021.**
With technologies readily available today from leading industry innovators like IBM Watson Supply Chain, CPG companies can find quick wins in a few key areas. We’ll focus on one today: omnichannel inventory visibility and management.
*Trends for 2019 in the Consumer Products Industry Supply Chain, IDC. December, 2018
**The Coming AI Revolution in Retail and Consumer Products, IBM Institute for Business Value in partnership with NRF, 2019
Inventory Visibility and Management
Brands need insight into their global, cross-channel inventory as much as any retailer, and this is only getting more difficult as digital and physical channels continue to proliferate and merge. Inventory insight is required for more accurate forecasting, stock out avoidance, and efficient inventory management across the brand’s networks of distribution centers, warehouses, retailers, and brick-and-mortar stores.
Inventory transparency is also essential for improving logistical efficiencies and cost. For example, if a certain amount of product is needed in a specific region or at a specific location, it may be most cost-effective to ship half from one Distribution Center and the rest from another, or from a mix of distribution centers, warehouses, stores, and other locations, based on a wide variety of different variables. AI-powered inventory visibility and supply chain insights not only provide the inventory insight needed to make more informed decisions like these, but actually drive the decision making process with cognitive intelligence that learns and optimizes over time. AI can predict delivery delays, weather-related issues, and other incidents that impact logistics, and quickly act to ensure brands are avoiding downtime or delays.
Even small improvements in efficiency translate to massive gains over time, and pave the way for a more agile supply chain—and a more agile business.
- Modernize and Streamline the B2B Buyer Experience
With so much focus and investment spent on improving the end customer experience, limited attention is often paid to optimizing the B2B buyer experience, to a company’s detriment.
CPG companies sell products through varied and vast networks of distributors, wholesalers, and retailers, but the systems and processes that many companies use to sell and manage this business are clunky, siloed, inefficient, and lack the functionality to provide easy self-service buying. This in turn can create operational inefficiencies and hamper growth potential. Additionally, the disruption and demand for change coming from consumers is influencing similar demands across the B2B world. Every buyer, whether consumer or professional, wants the Amazon experience.
eCommerce isn’t just for consumers. An optimized B2B eCommerce experience improves efficiencies and accelerates sales cycles, provides the brand with crucial data insights needed to make more informed decisions over time, and creates further differentiation in a sea of competing brands. If you’re not providing an enjoyable B2B buyer experience, another brand surely will.
B2B Commerce allows a brand to offer consumer-like buying experiences that increase loyalty and CLV. Product recommendations, personalized promotions, product bundling, fast reordering, and custom catalogues are all possible with B2B eCommerce, and open up new opportunities for growth in each account. Additionally, digitally-optimized B2B sales creates a more agile organization by enabling a brand to go to market faster with new products and quickly create new business models to address market or customer changes.
Driving growth amidst massive industry disruption and competition requires the design of a more agile, customer-centered organization. Through B2B sales optimization, logistical and supply chain efficiency, and a deeper understanding of the end customer, CPG companies can design their future roadmaps around the needs and expectations of their customers, and deliver profitably on those expectations for years to come.