By Stephen DeAngelis
Geopolitical tensions like the war in Ukraine and the Red Sea conflict are disrupting the flow of raw materials essential to everyday goods. The ripple effects of climate change, such as low water levels in the Panama Canal, are leading to elongated maritime delays and subsequent product shortages. Population shifts are influencing consumer demand swings as new buyers with different food preferences enter existing markets, requiring increased agility in the supply chain to meet changeable demand signals. Economic uncertainty and inflationary pressures are rapidly influencing buyer behaviors and brand loyalty. And the pricing ramifications of post-pandemic freight market volatility, capacity surplus and labor shortages have tightened the margin for financial error.
Compounded, it’s created a perfect storm of complexity at a time when value chain optimization and decision-making have never been more vital to enterprise health. Considering supply chains directly influence 50% to 75% of an organization’s total cost of doing business, maximizing value generation through efficiency and resilience is a key competitive differentiator in crowded markets. In turn, a recent IDC Info Snapshot indicates that 44% of consumer packaged goods (CPG) leaders “plan to increase the use of technology for supply chain management” in 2024.
Intelligently leveraging data from enterprise systems of record (SOR) and engagement (SOE) to drive effective business optimization and decision-making is imperative to weathering the storm. However, as many organizations learned from the pandemic, these data foundations are only as strong as their ability to act on them accurately with speed and at scale. Gartner researchers found that more than half (52%) of digitally enabled supply chain decisions “came too late because of the amount of time it took to conduct digital trade-off analysis,” highlighting the growing need for more integrated, agile and autonomous capabilities.
This has created space for a new solution architecture called systems of intelligence (SOI), a fit-for-purpose tool that can fundamentally understand the environment in which a business operates and then autonomously implement and adapt value chain optimization and decision-making strategies to align with evolving conditions. SOIs historically were unattainable due to technological limitations, but the emergence of next-generation technologies like generative AI and autonomous decision sciences have made them possible. Through the integrated adoption of SOI architectures, CPG and retail organizations can harness their data for mitigating risk, managing volatility and maximizing business value despite the chaos around them.
Amplifying The CPG Value Chain With Systems Of Intelligence
SOIs can integrate with an organization’s existing SOR and SOE applications, fusing human-like reasoning and generative AI with transparent glass-box machine learning and nonlinear optimization. It serves as a company’s centralized “brain” by automating the analysis of large, complex datasets to generate prescriptive and anticipatory insights around supply chain optimization but also consumer preferences, revenue growth opportunities and forecasted demand. Then, the SOI facilitates continual implementation, monitoring and refinement of those insights across the value chain. Leveraging SOIs in this capacity helps build resilience against volatility and enhance competitiveness. This enables global enterprises facing thousands of decisions per day to function effectively and become a leader in their market segment.
One example of this value chain optimization in action is agile demand forecasting. SOIs support agile advanced demand forecasting by integrating consumer insights and revenue optimization data to perform nonlinear demand and supply planning optimization. Based on their own holistic intelligence, these tools can generate accurate predictions on the baseline forecast of demand for specific products, price points, times, locations and more. This allows organizations to optimize supply chain planning for just-in-time delivery of raw materials and product volumes needed to meet changeable demand signals, reducing the risk of lost revenue from unexpected disruptions and excess inventory.
Driving Successful System Of Intelligence Adoption
Driving the successful adoption of an SOI solution architecture requires a strategic approach built around the intersection of value realization, data maturity and subject matter expertise.
Start by identifying manageable, yet impactful, use cases that can realize quick value from the enablement of the SOI. For example, developing a pilot project for a high-priority enterprise category that has sufficient available data and a mature management team is an effective way to position SOI adoption for success. Limiting the initial pilot to one or two significant categories and two retailers ensures it’s manageable but still provides a large enough model to build a compelling business case for full-scale deployment around it. In addition, this type of pilot can help secure collective buy-in among cross-functional stakeholders to enable efficient change management processes when implementing the SOI.
Successful SOI adoption is also contingent upon sufficient data foundations. Part of what the SOI performs is human-like reasoning on data pulled from several different sources, ranging from enterprise resource planning systems and their customer databases (SOR data) to customer relationship management systems and social media platforms (SOE data), among others. This makes data maturity nonnegotiable. Ensure your data foundations are robust, secure and stored in cloud-based environments to allow for seamless accessibility and integration.
It’s also important to remember that successful SOI adoption is ultimately driven by people. Leveraging solutions that incorporate human-like reasoning and autonomous decision science is complex in nature. In turn, there must be internal alignment and access to subject matter expertise to effectively facilitate the end-to-end implementation life cycle and scale the SOI’s usage over time. Prioritize having the right people in place by aligning your internal business, technology and data teams and working alongside established external partners with subject matter expertise in your industry and use cases.
The rise of the SOI resembles a powerful paradigm shift in how enterprise data will be utilized to drive value, competitiveness and resiliency moving forward. CPG enterprises that embrace SOI adoption will be positioned to not only navigate the challenges of 2024 but also unlock new levels of customer visibility, operational agility and sustainable growth for years to come.
