Discover 3 AI trends shaping the future of the CPG industry
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Three AI trends shaping the future of the consumer goods industry

How to harness the power of AI for a competitive edge

Aswin Chandrasekaran

Senior Partner, Consumer Goods Data-Tech-AI



Artificial intelligence (AI) is rapidly reshaping the consumer packaged goods (CPG) industry. CPG leaders who proactively embrace the full potential of this emerging technology can gain a significant competitive advantage – outpacing their rivals and establishing themselves as industry leaders.

Generative AI (gen AI) can help CPG companies transform some of the toughest areas of their business to manage: the order life cycle, retailer and consumer demand, and retail customer experience (CX). Let's explore how in more detail.

1. Using AI to optimize the order life cycle

CPG companies have a treasure trove of data about inventory availability, demand spikes, and the intricacies of order life cycles. This data often remains untapped because mining it can be labor-intensive and time-consuming. But now, tailored AI models are helping to transform CPG business data into actionable insights.

Gen AI models excel at tasks like text generation, translation, and summarization. These machine-learning models can understand and generate natural language. They use frameworks such as retrieval-augmented generation, a process for improving gen AI models with facts from outside sources, to optimize the output of large language models (LLMs) for accuracy and reliability.

Tailored AI models can be trained on proprietary data to address specific business needs. For CPG companies, these models can provide contextual insights that can help to optimize the entire order life cycle, from start to finish. For instance, it can meticulously analyze historical order data to find nuanced patterns and take advantage of increasingly real-time information on truck capacity, damaged items, and other critical touchpoints for better decision-making.

In today's volatile market, unpredictability can result in financial stress for CPG firms. Business losses stemming from unforeseen fluctuations in buying patterns and sudden supply chain disruptions are a harsh reality. Gen AI can serve as a kind of business clairvoyant, preventing revenue leakage by predicting the future before it happens.

For instance, CPG companies know all too well how difficult it can be when a retailer unexpectedly changes an order size. This puts pressure on the CPG leaders to service the request without incurring excessive costs. Here's where gen AI shines. By analyzing past instances of order changes and the impact on cost per order, gen AI enables CPG companies to optimize resource allocation and make sound choices, all while safeguarding profitability.

2. Versatile AI agents help predict the future

CPG companies can get one step ahead of competitors by deploying versatile AI agents. These agents are fine-tuned to perform a string of commands like creating charts and graphs, summarizing large chunks of text, or other time-consuming tasks. For CPG companies, they can quickly forecast retailer demand and respond to consumer needs with personalized promotions. And they can aggregate data from multiple sources – such as text, voice, images, and video – to identify hidden trends and relationships.

An AI agent can craft hypertargeted promotions to help CPG companies attract consumers and increase sales. For instance, AI can personalize marketing campaigns by inserting local vendors into a video message from a celebrity.

However, the bigger payoff may come from using AI insights to align production volumes with future orders. By predicting peaks and troughs in demand across retailers and regions, CPG leaders can minimize costly surpluses and shortages, optimizing supply chain resources. Additionally, demand sensing helps CPG companies uncover opportunities for new or updated products to meet evolving consumer expectations.

Using AI to predict the future presents a breakthrough for the fast-moving consumer goods industry. Now, enterprise leaders can react quickly to sudden changes in demand for popular products.

3. Improving the retail customer experience

Delivering exceptional CX for retailers hinges on managing a complex labyrinth of events across order life cycles and providing timely and accurate information at every touchpoint.

With features like real-time tracking and efficient order management to fulfill shipments in record time, CPG companies can streamline their logistic operations and provide exceptional service.

In summary, AI transcends human limitations on data analysis so that CPG leaders can tap into a wealth of data for better business decisions. This approach represents a seismic shift in how CPG companies approach the order life cycle, spending less time on repetitive tasks and more time improving customer satisfaction.

A new era of business innovation

Innovative leaders at CPG companies recognize that gen AI's potential goes far beyond boosting productivity. The technology is already improving customized promotions, customer service, demand forecasting, and product development. By blending the power of AI with human ingenuity, enterprise leaders are ushering in a new era of transformation in consumer goods companies.

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