I remember attending NRF in 2013. The theme was Big Data. Retailers and CPG companies today have vast amounts of information but still many struggle with how the data will be consumed and executed upon across the enterprise. Retailers and CPG companies are realizing that key points of information help drive not only an understanding of the consumer but where the consumption points happen as well as the frequency of the purchase. It is also the ability to pivot quickly within your supply chain and assortment strategy.
Lesson achieved; The pandemic brought us to the realization of agility and shifts in demand in the marketplace and has had a direct impact on consumer confidence in the market.
Analytics, data and the importance of dissecting what the information is telling us must be part of an overall analytical strategy. In a recent RIS Study in September (September 2020), it was found that 47% of the respondents do not have a clearly articulated analytical strategy. The top Analysis focus areas are Demand Forecasting, Consumer Insights and Inventory planning. All three of these processes impact shelf level capacity planning, localization of assortment and ability to manage inventory to meet the demand. Balancing the inventory is even more critical as you see the shift from in-store to online. Key data on demand forecasts should help drive the assortment strategy in many categories including the ability to understand that Less is more.
Having an analytic strategic plan across the enterprise creates the understanding and insight to answer “how prepared are we?” Understand that demand impacts assortment strategy, space capacity, inventory valuation and collaboration with your CPG partners. Additionally, store level consumption, workforce availability and consumer perception are all analytically driven. How you execute your data analytical strategy starts with the data needs of the organization. Most companies are starting to create analytic centers of excellence, hiring data scientists and creating plans for AI/ML driven inventory and demand solutions.
To execute upon those goals and processes, the business needs to first assess and evaluate the organization by asking some simple questions:
- Do we have the right toolsets to consume and model our data for usage?
- Are we providing a common data model or data set to work collaboratively with our suppliers?
- What would be the needs and frequency across the organization?
- Will our analytical strategy allow us to pivot as market conditions change?
- Will our data, and the data provided by our supplier partners, collectively drive our SKU optimization approach for our key markets?
It’s not just about articulating the strategy across the enterprise but locating from where the investment allocation will come within your organization. What is surprising, considering the need for SKU reduction, the curb-side uptick, and the need to be agile and pivot based on the data insights:
Only 13% of Retailers are allocating greater than 10% of their IT Budget to Analytics*
The ability to rationalize and optimize SKU’s within a category, expansion of other categories and supporting curb side shopping, are common with data feedback being the driver to success. Impact areas include; supply chain, store operations, suppliers and logistics’ ability to pivot to forward demand. Retailers and suppliers alike will need greater investment in capabilities that can identify shifts in demand and SKU’s that drive category growth, all why balancing inventory investment. If you’re thinking AI/ML solutions provide much of this needed insight, you’re correct.. However, without investment in analytics, large amounts of data will not be useful in the coming months.
*RSI Research study September 2020
In closing, seven years ago Big Data was thought to be our way to understanding the consumer and gaining insights to localized assortments. Though that is true and important, data has evolved where we have large amounts of information but need the ability to have a strategy that impacts and allows our organizations to pivot. Most suppliers and retailers will admit; the ability to be agile and pivot during the pandemic exposed them to the challenges due to lack of strategy. Retailers and suppliers were not able to ensure availability of inventory based on demand. If another pandemic, weather, or other unexpected event occurs, your organization should be prepared by having an analytical strategy that is enterprise-wide. Not only for crisis sake, but to serve your customers with the right assortment, localized favorites and ability to provide the products they need, regardless of how they choose to purchase. The question to ask is do we have an enterprise analytical strategy and where do we start?
Plantensive has the team to analyze your data, understand your direction and provide a roadmap to ensure you have the right strategy in place. Let Plantensive provide a comprehensive assessment of your data, business goals, understanding of solutions and provide a plan of action to begin your road to a sound Enterprise Analytical Strategy. To get started today, contact us today!
Blog Post Author: Todd McCourtie