- Customer engagement is an imperative for CPG manufacturers
- Make sure customer engagement is part of your IT strategy
- An IT-enabled connection in real-time can be a significant competitive advantage
Achieving visibility across the value chain, particularly information from partners such as distributors and retailers, remains elusive for most CPG companies today.
CPG companies are realizing that to achieve better process efficiencies in the area of sales operations, they need to collaborate more closely with their supply chain partners. Collaboration across the supply chain can be enabled using IT driven strategies. Emerging technologies such as cloud computing, next generation networks (NGN), mobile devices and business intelligence tools can help CPG companies in driving up the collaboration and customer engagement quotients across the value chain to achieve lasting competitive advantages.
Customer engagement is an imperative for CPG manufacturers. It involves best practices for distributors and retailers—customer service, right stock at the right time, promotions management, price/margin negotiations, new initiatives and creating consumer pull at the outlets. While the company may have very strong IT-enabled internal processes, information to and from external partners is missing without an IT link between them.
The chasm between external and internal worlds can be bridged if IT strategies are put in place. Linking the two can provide visibility into areas previously disconnected. An IT-enabled connection in real-time can be a significant competitive advantage for any CPG manufacturer.
Key high impact areas
Customer engagement touches two important external contacts—distributors and retailers. Distributor management involves route to market, outlet servicing, order generation, and stock management while retail involves merchandising, in-store execution and audits.
For distributor management, most CPG companies have systems in place or distributors themselves have ERP systems. The challenge lies in that the CPG company neither has links to the distributor ERP nor has complete visibility into the distributors’ systems and operations. Ideally, real-time data is required to manage the relationship with distributors more efficiently. In retail execution, the situation is slightly different as many processes are manual and error prone.
Automating external partner processes not only contributes to improving partner IT infrastructure, but brings about control and visibility.
New technologies that lend themselves to this collaborative model include:
- Internet-based cloud computing capabilities, which can be scaled at low cost, hold great potential for customers of CPG companies. If distributors are linked to the Internet and can access the cloud, they can receive and provide real-time information with little or no investment.
- NGNs allow users to access competing service providers and networks. This helps the CPG company by enabling customers or shoppers across many geographies to access the network and support a large number of subscribers per year. By adopting NGN, companies can see significant cost savings in their customer collaboration efforts.
- Using the Internet on mobile devices provides a real-time link between the external and internal world of CPG companies. Leveraging technologies such as cloud computing, SaaS and NGN, the mobile device can transform into the all-in-one device for CPG field teams. Mobile devices can be used to display product information, capture orders, update the shelf availability and even conduct audits and surveys. Information can then be transmitted to company servers.
- Most CPG organizations have Business Intelligence (BI) tools, but it is questionable whether these tools extract maximum value from enterprise data. Companies struggle to meaningfully use all the data, including data that is generated from channel partners. Without a proper BI strategy, only a small proportion of customer and shopper data is analyzed to make informed business decisions. A BI strategy can help merge internal and external data to create actionable reports and insights.
There are many processes where IT strategy helps improve efficiency. Distributor management systems, for example, can use the cloud to improve sales and reduce cost by better integrating and leveraging operations.
Ordering and promotions: Visibility into the planning and ordering processes of distributors; improving stock management processes to address aging and damages; capability to track, monitor assets and promotional goods in the system, and tracking changes in promotional plans.
Operations: Control can be exerted at the channel/outlet level. Other benefits include systematic measurement and reporting of key distributor metrics, and improved and automated operational workflows.
Retail execution: Provide the sales force with an Internet-enabled mobile/PDA, which improves productivity and provides real-time information.
Sales force management: Provides dynamic time and route management of field staff and improved coordination between head office, sales representatives and merchandising teams for real-time actions on field.
The selling process: Gain from availability of product information at the store, order capture, automated end-to-end ordering and monitoring of POSM and assets.
Promotions: Benefit from closer linkage to promotional planning to support the promotion execution process.
Execution and audits: These areas will see improved capture, analytics and reporting of in-store data as well as automated store audits to ensure better quality, consistency and faster turnaround.
These strategies are particularly useful in the developing and emerging markets, where IT solutions can improve customer collaboration. Though companies have to make necessary investments and initially fund the development of its partners, bringing partners into the IT-enabled customer engagement model pays off in the long run.
About the Author: Jayalakshmi Subramanian serves as a Principal Consultant at Infosys Consulting in the Retail, CPG & Logistics practice. She has worked on a number of strategic projects for global CPG clients and in the implementation of their IT strategies. She was part of the team at Infosys that developed the Infosys Collaborative Analytics solution. She has extensive experience in leading quantitative primary and secondary research, covering the spectrum from consumer to B2B research. She can be reached at email@example.com