In an increasingly competitive market, demand-driven supply network optimization can imbue your consumer packaged goods (CPG) company with the predictive power to succeed.
Data is a raw natural resource. The faster your business can analyze, refine it, and act on the resulting insights, the more intelligent your operation will be. This is true of every industry, but in consumer packaged goods (CPG), the ability to predict and respond to fluctuating demand can mean the difference between anticipating that market spike or ending up stuck with a warehouse of surplus stock.
Cloud enterprise resource planning (ERP) systems enable the ability to manage every aspect of an organization from one central hub. This means a nimble solution to respond to rapidly changing supply chains, distribution models, and product life cycles. For small and midsize businesses, managing CPG from a cloud ERP platform also means investing in a system that funnels all of your real-time inventory and sales data into a built-in analytics engine.
Making the most of your ERP system’s planning and reporting modules is the key to unlocking the power of predictive forecasting. Especially once your organization’s operational data is flowing automatically into business intelligence (BI) and Big Data tools, optimizing your CPG supply network for new market demands can be as simple as glancing at the real-time data visualizations on your cloud dashboard and clicking a button.
Evolving Market Forces in CPG and ERP
Before we get to real-time forecasting, it’s important to understand how a cloud-based ERP system works. Across every facet of your organization, ERP platforms are designed to consolidate and automate business processes. The data from every department, from procurement and sales to finance and human resources, is logged in real time and stored in the cloud.
In CPG, this cross-departmental coordination and transparency is also key to dynamically managing your supply chain. This means securely linking the systems of every partner and supplier to sync just-in-time (JIT) inventory figures, logistics and distribution schedules, and of course granular product sales data.
In consumer packaged goods distribution, that sales data is constantly in flux. Unlike durable goods, CPG items such as cosmetics and cleaning products or food and beverages have a short shelf life and a rapid replacement cycle. To make the data analysis even tougher, CPGs are not generally affected as significantly as durable goods by large economic booms or slumps. The market forces affecting product demand are more subtle.
At the same time, the CPG industry is a hyper-competitive market where the level of competition is only increasing. Deloitte’s 2018 Consumer Products Industry Outlook found that companies are trying bolder strategies to differentiate themselves in a more stable global economy. An increase in global mergers and acquisitions is consolidating CPG resources, while an increase in digitization is creating more efficient supply networks.
That’s where centralized cloud ERP data comes in.
Data-Driven Predictions and Optimized Supply Networks
In ERP systems like Navigator’s Packaged Solution for CPG Distributors built on SAP Business ByDesign, organizations can customize their solutions to gather custom data points and generate targeted reports on the key supply chain factors. The ERP platform then lets you pull data from multiple sources across your supply chain into custom reports, and set up workflow-based alerts pushed out to employees in the distribution channel.
More importantly, the stakeholders in the CPG operation have a real-time analytics dashboard in front of them. Drag-and-drop interfaces with interactive data visualizations consolidate the sales and inventory metrics from the entire supply chain pipeline, updated in real time. So if an unexpected cold front hits the southeast region of your supply chain and all the hot tea inventory begins to disappear off shelves faster than anticipated, you’ll see that spike right on your dashboard and can drill down to find out why.
Predicting CPG market shifts isn’t about intuiting a trend before it happens. It’s about leveraging real-time data to identify a change right as it happens and use that leg up to make a predictive decision.
More advanced ERP systems can take this even further with artificial intelligence and automation. Beyond the real-time analytics and custom reports coming across your dashboard, machine learning (ML) algorithms built into these platform can analyze vast data sets for you. These sorts of AI tools have become available within more and more popular ERP platforms over the past year or two. The important thing is to know what you’re looking for.
The more refined CPG data an organization feeds these ML models, the faster and more accurately the AI will learn what logistics, inventory, or sales metrics affect your supply chain’s unique product demand needs. From there, a business has two options: use those insights to fuel even better forecasting and decision-making, or enable more advanced automated workflows within your ERP system to create a supply chain network that begins to self-optimize.
Ultimately, it all comes back to what you’re doing with your data. When forecasting demand on a CPG supply chain, make sure your company’s most vital natural resources is not going to waste.
If you are thinking ERP, please consider Navigator.
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