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Role of Analytics in CPG Industry
Adarsh A & Dinakar J
hello@perceptive-analytics.com
☎ 646.583.0001
Disclaimer
All the information, facts , figures and other data used in this presentation is collected from
different inter...
Introduction
* http://www.gmaonline.org/about/
Contribution to the economy
According to Grocery Manufacturers Association*...
Characteristics of the CPG industry
• High volumes
• Low contribution margins
• High stock turnover
• Extensive distributi...
Trends Across Sectors
Source: https://foodinstitute.com/images/media/iri/TTFeb2013.pdf
• Dollar Sales across categories in...
Trends – Economic
Source: GMA 2013 Financial Performance Report, Growth strategies – Unlocking the power of consumer
Net S...
Trends – Technological 1/2
Source: Winning with IT in consumer packaged goods: Seven trends transforming the role of the C...
Trends – Technological 2/2
Source: Winning with IT in consumer packaged goods: Seven trends transforming the role of the C...
Trends – Geographical
Source: Trends that will shape the consumer goods industry – McKinsey & Co.
• 1 billion new consumer...
Role of Analytics
Pricing – Role of Analytics
http://www.deloitte.com/assets/Dcom-
UnitedStates/Local%20Assets/Documents/us_CPGExternalMessa...
Marketing Mix – Role of Analytics
Optimizing
Marketing Mix
Deciding on Trade
Spend Allocation
Rise of Digital
Consumer
Iss...
Portfolio Optimization – Role of Analytics
http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture_CGS_Portfolio_Op...
Inventory Management – Role of Analytics
http://www.wns.com/Portals/0/Images1/Retail%20and%20CPG%20Brochure_new.pdf
Supply...
Conclusion
Consumer Packaged Goods Companies have to continuously innovate to remain competitive. The
rapidly changing con...
www.perceptive-analytics.com
Analytics
Spreadsheet
Solutions
Our Services
17
Spreadsheet Applications
Contract Negotiation
Litigation Modeling
Decision...
Analytics
Spreadsheet
Solutions
Data Visualizations
Marketing
Marketing Mix Modeling Price Promotion Analysis Catalogue Op...
Our Clients
19
Contact us:
Adarsh A & Dinakar J
hello@perceptive-analytics.com
☎ 646.583.0001
www.perceptive-analytics.com
Location:
353 ...
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Role of Analytics in Consumer Packaged Goods Industry

Role of Analytics in Consumer Packaged Goods (CPG) industry.

Role of Analytics in Consumer Packaged Goods Industry

  1. 1. Role of Analytics in CPG Industry Adarsh A & Dinakar J hello@perceptive-analytics.com ☎ 646.583.0001
  2. 2. Disclaimer All the information, facts , figures and other data used in this presentation is collected from different internet sources. Perceptive Analytics doesn’t make any warranties or representations as to the accuracy of the data and assumes no liability or responsibility for any errors or omissions. The sources of data are appropriately disclosed in all the slides. Appropriate assumptions are made at places where sufficient data is not available, the fact of which is disclosed in the respective slides. Also, we do not claim ownership/copy right of any image that has been obtained from the public domain. We have acknowledged sources of all the information as much as possible.
  3. 3. Introduction * http://www.gmaonline.org/about/ Contribution to the economy According to Grocery Manufacturers Association* data, the US CPG market is worth $2.1 trillion and employs 14.7 million workers in the United States. The industry contributes $1 trillion in added value to the economy every year. 13% 87% Economic Contribution CPG Rest 15 0 5 10 15 20 Employment Millions # People Employed
  4. 4. Characteristics of the CPG industry • High volumes • Low contribution margins • High stock turnover • Extensive distribution channels • Low switching costs for the consumer • High market saturation • Competitive prices • Consumer behavior
  5. 5. Trends Across Sectors Source: https://foodinstitute.com/images/media/iri/TTFeb2013.pdf • Dollar Sales across categories increased aided by inflation. • Number of Convenience stores grew by 0.7% in 2012 and 1.2% in 2011 • Drug channel performance lagged industry average in 2012
  6. 6. Trends – Economic Source: GMA 2013 Financial Performance Report, Growth strategies – Unlocking the power of consumer Net Sales growth rates slowed in 2012 for both manufacturers and retailers amidst slow economic recovery in the U.S. Net Sales Growth Earnings Growth Even though there was a decline in net sales growth rates in 2012, earnings growth rate increased for manufacturers.
  7. 7. Trends – Technological 1/2 Source: Winning with IT in consumer packaged goods: Seven trends transforming the role of the CIO: McKinsey & Company Direct consumer relationship Focus on individual customer needs, regain brand loyalty and improves product decision making process Mobile and location based services Amplifies the direct-to-consumer marketing, reduces the cost of product launches and helps in improving shelf space Shift to predictive analytics Provides real time data from social media and other online portals, refine the traditional decision making process
  8. 8. Trends – Technological 2/2 Source: Winning with IT in consumer packaged goods: Seven trends transforming the role of the CIO: McKinsey & Company Demand driven supply chain management Use of technology minimizes inventory levels, improves service performance and reduces stock-outs Idea-to-product accelerations Helps in introducing new products faster and at lower costs
  9. 9. Trends – Geographical Source: Trends that will shape the consumer goods industry – McKinsey & Co. • 1 billion new consumers by 2020 • Increase in the middle income group - spending capacities of $10 and $ 100 per day
  10. 10. Role of Analytics
  11. 11. Pricing – Role of Analytics http://www.deloitte.com/assets/Dcom- UnitedStates/Local%20Assets/Documents/us_CPGExternalMessaging_071310.pdf Lack of Visibility into Profit Margins Managing Channel Partner Economics Improving Trade Spend Effectiveness Better Consumer Marketing Data Dispersion Issues Provides insight into profit drivers at different levels of customer, brand and markets. How Analytics can help? Inputs on where the trend spend is invested and corresponding return. Compare across categories Provides an integrated view of profitability across various channels of the supply chain. Insights into demand elasticity of pricing strategies, understanding consumer behaviour in relation to price changes Helps in understanding relationship between manufacturers and retailers margins. Suggest strategies for improvement
  12. 12. Marketing Mix – Role of Analytics Optimizing Marketing Mix Deciding on Trade Spend Allocation Rise of Digital Consumer Issues Predictive analytics to determine effectiveness of each communication channel, assess the viability and forecast the channel’s impact on the sales revenue. How Analytics can help? Track impact of product launches in real time, develop customer insights, collaborating with business partners etc. Tracking various key performance indicators, calculate ROI for each customer segment to budget and plan appropriately. Analytics models can predict promotion performance, enable scenario analysis
  13. 13. Portfolio Optimization – Role of Analytics http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture_CGS_Portfolio_Optimization.pdf High High Low Low DemandMeasure Degreeof Incrementality Supply Measure Degree of Complexity Action 1: Invest to Broaden & grow Action 2: Improve consumer value or transfer demand to like item and eliminate Action 3: Simplify platforms, eliminate items Current Position New Item Productivity Cost Improvement Drivers Item Incrementality (optimum assortment) Account (Item) Cost to Serve and Profitability Marketing Investment & Demand Analytics Productivity Improvement Process Using Demand Analytics the companies can foresee how a product is going to perform and take appropriate action. See scenarios below:
  14. 14. Inventory Management – Role of Analytics http://www.wns.com/Portals/0/Images1/Retail%20and%20CPG%20Brochure_new.pdf Supply Chain Planning & Forecasting Sourcing & Procurement Fulfilment Services Areas Accuracy in forecasts, increases capacity utilization and inventory turns through demand and capacity forecasting and better collaboration between retailer and supplier How Analytics can help? Carries sourcing analytics , freight lane analytics, freight pay analytics and customer analytics Strategic sourcing and spend analytics to reduce procurement costs, cycle time, better spend visibility Returns & After-Sales Management Facilitates root cause analysis and returns fraud analytics leading to reduction in returns rate and fraud rate
  15. 15. Conclusion Consumer Packaged Goods Companies have to continuously innovate to remain competitive. The rapidly changing consumer behavior along with shortening customer loyalty periods have thrown new challenges at the CPG Companies. The companies are now looking at innovative methods to reach the end consumer. Some leading companies have already established separate analytics divisions to accurately identify the product attributes that are valued by the consumers. Combining the consumer's view of the product with in-depth analysis of the portfolio supply chain, the companies would be able to offer the right product/service for right price at the time when needed by the consumer. To conclude, CPG companies have to invest in analytics not to go ahead but to stay in the race.
  16. 16. www.perceptive-analytics.com
  17. 17. Analytics Spreadsheet Solutions Our Services 17 Spreadsheet Applications Contract Negotiation Litigation Modeling Decision Support Tools Dashboards Reporting Simulations Financial Modeling
  18. 18. Analytics Spreadsheet Solutions Data Visualizations Marketing Marketing Mix Modeling Price Promotion Analysis Catalogue Optimization Segmentation Web Analytics Churn Analysis Risk Management Credit Risk Management Liquidity Risk Management Capital Allocation Analysis Collateral Management Fraud Detection Supply Chain Inventory Optimization Demand Analytics Distribution Network Optimization Sourcing Analytics Freight Lane Analytics Verticals Consumer Packaged Goods Retail Healthcare Banking, Financial Services and Insurance Our Services 18
  19. 19. Our Clients 19
  20. 20. Contact us: Adarsh A & Dinakar J hello@perceptive-analytics.com ☎ 646.583.0001 www.perceptive-analytics.com Location: 353 West 48th Street Floor 4, New York City, NY 10036

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