It was 2001 when Jack Welch said that the biggest opportunity for big companies lay in the digitization of internal processes. But we believe that most major CPG firms are just beginning to realize the full potential.
F&A is an area of especially high opportunity. Compared to teams that connect directly with customers, many finance functions have been lower on enterprises’ priority lists for technology investment.
Those areas of F&A that have enjoyed strong digital adoption and investment to date – such as electronic invoicing – largely place paper-based processes online and still demand human effort for the actual work, such as validating invoices against contract terms for trade-promotion payments.
But that’s all changing. As the finance organization grows more central to business decision making, teams are investing in new digital areas – some of which can reimagine how F&A operates.
Companies are, for example, using automation and AI to transform trade-promotion processes. Digital technologies automate all aspects of the trade-promotion cycle spanning contract creation, invoice validation, proof-of-performance, and payment. For one CPG giant, we expect this to lead to a $21 million increase in net revenue annually from fewer overpayments and a 60% productivity gain across the end-to-end cycle.
Advanced analytics will help companies drive even more significant gains. As CPG firms become more agile in their operations, they are creating more data on their transactions with third parties – such as on-demand trucking providers or trade-promotion partners. When this information is captured by robust digital solutions with analytics and AI capabilities, companies can generate insights and intelligence into areas such as payment-on-time, spend history, or supplier ROI.