Takeaways:
- 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.
Why is customer engagement important?
Customer engagement is an imperative for CPG manufacturers today. 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, helping in taking timely and effective actions. 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 activities including route to market, outlet servicing, order generation, and stock management while retail management 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 to these processes.
IT strategies
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 about their business, with little or no investment. This provides the opportunity for customers to use mobile devices, PDAs and computers in their day-to-day operations to provide real-time information.
- Next Generation Networks (NGN) allows 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 in supporting a large number of subscribers per year. By adopting NGN, CPG 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, Software-as-a-Service (SaaS) and NGN, the mobile device can transform into the all-in-one device for CPG field teams. Mobile devices and PDAs can be used to display product information, capture orders, update the shelf availability and even conduct audits and surveys. Real-time information can then be transmitted to company servers by using GPRS connectivity.
- 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. Reports and insights when timely, relevant and actionable help build stronger customer relationships and improve retention.
IT benefits to customer collaboration
There are many processes where IT strategy helps in improving efficiency and contributes to better sales or reduction in costs. Distributor management systems, for example, can use the Cloud to improve sales and reduce cost by better integrating and leveraging distributor operations in a number of areas.
Data: Benefits include synching and in-time receipt of distributor data.
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, improve and automate operational workflows to minimize delays and errors, such as claims.
Retail execution: Provide the sales force with an Internet-enabled mobile/PDA, which improves productivity and also provides real-time information to the CPG company.
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.
CPG companies have to make sure customer engagement is part of their IT strategy. The strategies discussed above 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. It also assists partners by making their processes more streamlined and effective, thus ensuring higher satisfaction and retention.
