CPG Industry and Analytics

Home / Analytics / CPG Industry and Analytics

CPG Industry
CPG – consumer packaged goods industry is more oriented towards consumers, so we can also call it customer preference market. In CPG, companies have to concentrate more on consumer behavior. Customer preferences should be taken into consideration and anyone who can fulfill the needs will definitely lead the market.
The consumer packaged goods industry is one of the largest industries which value in trillions. Currently, industry growth is steady for this sector and many companies are earning large profits. Many companies are earning multibillion dollar revenue and it will grow.
CPG industry is comprised of different goods which need to be manufactured packaged and marketed to fulfill consumer needs e.g. Food and beverages, Clothing, Household Products etc.
Current Practice:
Company purchases raw material from providers, processes it through manufacturing operations, and these packaged goods are handed over to distributors, retail outlets to make it available for consumers. While performing these operations company has to make sure everything is working smoothly. Operations should be carried out in compliance with norms governed by regulatory authorities. Contract manufactures and contract packagers work with the companies to fulfill operational need of manufacturing and packaging department.
In order to work more efficiently to protect/increase profits company has to perform different operations effectively:
 Supply Chain / Raw Material – Good inventory, Smart Sourcing and Reduce Scrap.
 Manufacturing – Efficient productivity.
 Marketing and Sales.

In current competitive age, every company has to follow best practices in order to achieve good revenue and to be consistent in future. Market trends are changing very fast and it’s dynamic always. Visionary leaders and managers can help organization to achieve goals. IT infrastructure can help them to work more efficiently. ERP solution which maintains only data is not useful nowadays it should provide smart analytics which can help in taking decisions and growth.
Consumer market changes dynamically. Global economy is changing. Many countries are rising as future markets. Many people will shift from lower middle class to middle class in near future. No. of middle class people are increasing every day. There will be more percentage of middle class people in next decade. Market opportunities are opening in different corner of world. Consumers are increasing, industry will grow and so competition will be high.
Emerging Big data technology is providing customer insights which are helping to plan, strategize and capture market. Social networking has become a huge platform to know customer patterns. Use of smart devices, smart phones and its using pattern also provides huge information. In order to analyze this huge data to extract the decisional information, company should have infrastructure and they must work on it. In case somebody avoids doing so then the market may start avoiding them.

Let’s see an example,
A company plans a product launch before Christmas holiday. In mid of June, marketing department proposed a plan considering efforts for R&D, product design, procurement, manufacturing, packaging and distribution. So they plan to make the product available in the market two weeks before Christmas holidays. Due to some failures company is unable to achieve product launch on time.
Impact analysis:
 Product launch delayed by two days – They missed shopping weekend so lost 20% customers.
 Product launch delayed by a week – lost 32% customers. (Including 20% above)
 Product launch delayed by 10 days (a week + two more days) – They missed 2nd shopping Saturday so lost 58% Customers. (Including 32% above)
And for more delay they lose more customers and more revenue.
[Shopping Saturday/weekend – It represent a day on which most of customer will shop for holidays. These trends can be found using data analytics.]
There should be a robust solution which enhances organization capabilities to forecast effects of change in plan.

PLM Solution:
PLM solutions are specially designed software’s to handle product lifecycle. It can help in product design, project management, BOM, Packaging specification, Distribution plan, marketing strategy etc. It handles each and every phase in product development. Employee can work in parallel on same product and it enhances collaborative work.

 Product design
Product design module can provide answer to many questions like –
How much material will be required for production?
How a small change in design can impact revenue?
How product will be displayed in stores?
How much space it will occupy?

 Packaging specification
Packaging specification can handle product packaging and labeling specifications. Many countries follow different regulatory and compliance norms. PLM solution can help to manage these compliances automatically. If company fails to any of compliance then product need to be recalled from market.
In CPG 33% product recall are due to packaging and labeling errors. Recall can cost up to multimillion dollar for a company. Recall can cause hamper to company by revenue, good-will etc. and
Company may lose many customers for some time or forever.

 Planning
Planning is necessary in order to achieve target hence having a robust solution for it is must. PLM solution can help for planning. We can see in above example, how deviation in plan can impact revenue.

Analytics has become a tool to capture consumer market. Market analysis, consumer behavior, customer feedback are key factor for growing business. Market Analytics have become key tools for CPG industry. Consumer analysis is main part of it. Consumer data is available in different forms at many sources; social media is one of them. Smart device also provides consumer insights; from its usage pattern we can find useful information. Company database can help to know shopping behavior of consumers. This availability of data in different from gave rise to emerging field of BIG DATA.
After analyzing data one can know peak shopping period, best-selling products so shopkeepers can plan their stock. Around 30% shoppers skip their intended purchase in peak shopping time due to out of stock. Because of it, company loses onetime revenue and its customers are explored to competitor also. [Average out of stock rate is around 10%.]
Many retailers are using private label brands. As they found customers are bound with retailer name so they will trust on retailer brand also. But for CPG companies which have market across globe need different sources to know about their customers.
Facebook comments, likes on Facebook, tweets are good sources to know about consumers and product. Social media is emerging as advertising portal and analytical solution for product marketing. For many companies, advertising on social media given more than 200% return for each dollar spent.
Companies are using data to plan new strategy. They are also encouraging people to use different application to provide good service to customers. In return they know more about customer…

Online Shopping
It has become convenient for customers. They can buy anything from home just on click.
In return of this, company knows shopping trend, interest of customers, best-selling products so company can plan product production, availability and marketing strategy effectively.

Mobile Shopping in Malls
Malls are providing smart devices or smart applications on phone for shopping. It is mobile technology that enables efficient, standardized intelligence gathering at every retail store. Customer can see product in mall and need to select/buy products by clicking in device. Then product will be delivered directly from inventory to customer’s vehicle or at home. It became easier for customer to select product on just click and no need to carry product throughout the mall.
In return of this, company knows customer shopping pattern, where customer stopped for much time? Which products attracted customers? Which design is good? Who visited frequently? How much time one spend in mall?

Opportunity for I.T. Industry:
IT companies are offering enterprise collaborative solution to manage organizational operations. They are encouraging use of web and mobiles to interact with customers. Different products are developed for product reviews and trends flowing in the market.
Big Data, Mobility and cloud are emerging technologies in I.T. Uses of smart phone is increasing so one can’t ignore mobility. Cloud provides flexible resource sharing. In this competitive age, no one can bear cost of extra resources. As data is dynamic and vast so resources are required in large scale. So cloud is more efficient approach. Analytics has become key player for decision making and so Big Data will be driver of business in near future.