Here's How CPG Companies Can Get Ahead of the Generative AI Revolution

Imagine if research and development could be condensed into a single swift action. Imagine no more. A company using an artificial intelligence platform can ask for insights on a target market, and the platform can analyze customer feedback emails, social media engagement, and online activity to return a clear picture of market trends.

These insights can then be synched with product development and used as guides for generative AI, which can quickly create prototypes that teams can further refine based on real-time updates on regulations, ingredient sources, stakeholder input, and customer feedback.

Recent advancements in generative AI make this possible. Throughout the CPG industry, businesses are experimenting with powerful applications of AI to enhance operations such as research and development, quality assurance, and customer engagement.

The infusion of AI and data analytics throughout business operations is driving the transformation of companies into intelligent enterprises. This applies to consumer industries and to any company that manages the shipment of goods. As AI adoption increases, several trends are likely to emerge.

Here are a few ways generative AI will impact the CPG industry in the near term:

1. Businesses will rely more on online data and analytics to formulate insights.

Previously, CPG companies relied on distributors and retailers for consumer data. Moving forward, businesses will use AI to collect and analyze online data (e.g., customer feedback emails, social media activity, brand engagement online, etc.) to formulate insights and drive sales.

This will likely lead to greater online engagement between brands and customers and a renewed focus on customer experience across channels to maintain constant feedback.

2. Traditional strategies will become more personalized to provide consumers with tailored brand and product experiences.

Brands already offer personalized products for a premium. Customers can build their own shoes or get a custom message printed on their candy. Now, generative AI allows individuals to draw inspiration from existing content to create something entirely new.

Brands can use data and generative AI to offer greater personalization and customer engagement as a way to tap into new revenue streams and increase customer engagement.

• See also: Colgate-Palmolive Piloting Generative AI Chatbot With Potential To Shape Product Development

3. Asset and labor utilization in manufacturing will become smart factories, using AI and data to make decisions.

Today, many chief digital officers and chief information officers are responsible for the technology in their companies as well as connected technology in their operations, shop floors, and manufacturing plants.

As plants become more automated and more manufacturing moves stateside because of the challenges experienced in the last few years, there will be a proliferation of high-tech smart factories that will allow businesses to garner more information than ever before. AI can help businesses use this information to refine operations and improve efficiency.

4. Businesses will shift from reactive and responsive to anticipative and predictive.

Businesses are already using consumer behavior analysis and microsegmentation — identifying and grouping consumers based on similarities in their transactions and their behavior — to anticipate behaviors and make the necessary accommodations. This can mean reallocating stock or increasing personalization. By increasing data analytics capabilities, AI can help brands develop sharper insights about consumer behavior to get ahead of trends or even help shape them, leading to more proactive efforts and greater control.

As businesses rely more on AI to conduct research, provide insights, and guide activities, they need to ensure the AI's data is accurate and reliable. In addition to reviewing data handling procedures, businesses will need to develop new protocols for the use of AI and generative AI. Teams need to be trained on how and when to use the technology to follow best practices.

Businesses also need to be sure they’re taking all necessary precautions to protect consumer data and ensure it’s managed properly. This means developing a comprehensive data security program, with protocols for data handling and management, that works with a rigorous cybersecurity program to prevent breaches and minimize exposure to threats.

Advanced utilization of artificial intelligence requires special skills and technical expertise that many companies might not have. Companies might opt to expand their in-house capabilities by staffing an AI team or upskilling the existing workforce to be more knowledgeable of AI. Companies might also benefit from an AI leadership team dedicated to considering opportunities and potential challenges and developing a practical strategy that addresses both.

Rapid advancements in AI and generative AI present valuable opportunities for CPG companies to refine business operations and increase their competitive advantage. By adopting AI, brands can significantly enhance their data analytics capabilities for stronger innovation, decision-making, and productivity.

However, brands need to act quickly and strategically to keep up with the rapid pace of innovation. This means making AI a key consideration throughout the business and establishing the necessary guardrails so teams feel supported to safely experiment with all AI has to offer.

Srini Rajamani serves as senior VP and sector head of consumer and life sciences at Wipro Limited.