Next Generation Predictive Analytics: Bill Gilmour, IBM
2011 will be a year of opportunity for consumer goods companies to differentiate themselves based on demand-driven insights capabilities. To gain competitive advantage, leading companies are adopting an enterprise strategy for data management as the foundation for breakaway analytic capabilities. Bill Gilmour of IBM's Consumer Products Industry Global Solutions Management describes the importance of adopting a demand-driven repository to leverage retailer and consumer insights.
CGT: Why are real-time insights and analytics becoming increasingly important for consumer goods companies?
Gilmour: Consumer goods companies are clearly realizing the imperative for rapid response in the marketplace. Companies are becoming more demand-driven as the consumer environment in recent years has fundamentally shifted, causing challenges for organizations in areas such as forecasting demand, inventory management, on-shelf availability, relationships with retail partners, and connecting with the consumer. ERP business process automation is no longer the differentiator as it was even five years ago. Additionally, effective collaboration with retailer partners through shared analytics and insight can be game changing.
One key differentiator in the near future is how well insights and forward-thinking analytics are being used across the enterprise, as opposed to a one department view. Leading consumer goods organizations are also moving from an automated "what happened" view, to an optimized "what will happen" view to transform their business. These predictive, near real-time analytics play a key role in extracting costs out of the system, which can enable a company to improve margin and drive sales.
CGT: Why is the Demand Signal Repository becoming crucial for success in the consumer goods market?
Gilmour: Many consumer goods companies are not yet realizing the full analytic value of the many data sources that they have available. Information from ERP and internal systems, loyalty programs, the point of sale, supply chain, demand planning, syndicated data, social media and e-commerce are just some of the many sources needed to drive true demand-driven insights and analytics.
Downstream point-of-sale (POS) data is becoming more widespread, with many retailers now sharing this data with consumer goods companies on a daily basis and expecting predictive insight from their suppliers in return.
The need for utilization of the demand data, however, is not just for sales and category management any longer. The Demand Signal Repository provides the integrated downstream data to optimize on-shelf availability, improve vendor managed inventory, enable more profitable trade promotions, optimize new product introductions as well as enhance consumer understanding.
The Demand Signal Repository is the overall information hub, providing the foundation for advanced analytic and optimization capabilities into the next decade.
Over time, with proper data management, centralization, harmonization and cleansing, information trust can be established both inside and outside the organization, enabling one single version of the truth for all.
CGT: How should consumer goods companies approach this trend?
Gilmour: The trend toward optimizing enterprise Demand Signal Repositories will continue to grow. This is not just about the technology and its deployment for optimal utilization, but it also requires business process change to be fully adopted and domain knowledge about integrating multiple data sources for enterprise cross-functional use.
As your organization moves toward this strategy, it is important to first develop a cohesive business case with key stakeholders -- one that defines the rationale and builds support.
The organization should start with a pilot program with measurable initiatives in one or two functional areas, with a longer-term plan of rolling out enterprise-wide for full benefit. Involving your trading partners early in the process will help to build lasting collaboration.
Over time, as the organization sees the positive business benefits realized from the advanced analytics and optimization, full enterprise adoption will be embraced.
Early adopters of the demand signal strategy can expect benefits to be realized in revenue, cost reduction and overall margin improvements.