How CPG Leaders Can Navigate Economic Challenges with Data-Driven Planning
In today's marketplace, a perfect storm of commercial, supply chain, and operational disruptions has unfolded, triggered by rising inflation and the looming rumors of a recession in the latter half of the year.
The rising costs of raw materials and production have led to unprecedented price increases, squeezing profit margins and adding to the uncertainty surrounding the economic recovery timeline. What’s more, consumer behavior plays a significant role, as they hold more power than ever in the buyer-seller relationship and are tightening their spending due to trickling cost hikes.
These challenges have put high pressure on CPG companies, creating an air of uncertainty for decision-makers in the industry. However, as CPG leaders continue to navigate these challenges, there is an opportunity to evaluate their business models to drive profitability and weather the storm.
Leveraging Data to Gain Future-Forward Insights
Despite advancing technology, many CPG companies still rely on old-school methods and systems — notably spreadsheets — to perform their planning processes. From inventory and merchandise planning to forecasting and budgeting, these practices are often siloed and can hamper decision-making, leading to inefficiencies and missed opportunities for cost savings.
CPG leaders should instead capitalize on digital transformation projects that embrace data-driven planning capabilities and allow teams to be more adaptable and agile despite the volatility of marketplace dynamics.
Effective planning across finance, supply chain, and sales carries a multitude of data that requires a detailed, often time-consuming, analysis — and the volume of the data will only increase in the current environment. Embracing a modern data-driven approach is paramount for CPG leaders aiming to stay profitable, competitive, and responsive to current market uncertainties.
Solutions that naturally integrate automation and advanced analytics enable businesses to extract actionable insights in real-time from large datasets, empowering them to make informed decisions and optimize their business operations effectively and efficiently. These solutions often allow planning teams to operate with the velocity and level of granularity that would be impossible to achieve with a spreadsheet.
Turning Insights to Action Through Connected Planning
Studies show that embedding revenue growth management cross-functionally is 2.4 times more likely to capture and sustain value for companies. Data-backed insights give CPG leaders the confidence to drive transformation in their revenue growth management and strategically design price pack architectures that balance profitability and consumer value.
Connected planning integration capabilities allow the data and insights to be accessed by all stakeholders. Additionally, plans can easily be translated to cross-organizational teams, providing CPGs with greater opportunities to respond to changing conditions quickly. Connected planning takes the guesswork out of forecasting and sales pipeline consolidation. In turn, CPG companies can uncover cost-saving opportunities across the entire supply chain.
With the current cracks in the global supply chain, the stakes are high for CPG companies to get innovative plans as accurate as possible to ensure alignment of marketing activities, adequate product supply, and excellent retail execution. Siloed communication and processes, lack of historical data, and the uncertainty of consumer reactions all conspire to make planning an arduous task.
As CPG companies navigate the intricacies of planning amid these market uncertainties, data-driven and connected planning approaches emerge as essential tools to optimize revenue growth management, increase agility, speed up decision-making, and identify savings.
Bob Debicki is the Senior Director of Global CPG & Retail Industry Solutions at Anaplan.