Fast Moving Consumer Goods is a multi-million dollar industry. There’s a constant need to bring more innovations and improvements to handle the big competition and grow. That brought us to the situation where AI is no longer “this technology to try someday” – it’s already happening. And it’s not only a matter of growth anymore. More and more often, it’s about surviving on the market where everyone else adopts it.
It applies especially in the FMCG industry, where there is a lot of data to process, operations to optimize, and decisions to make. The potential of AI technology in the FMCG area is big and it’s growing month by month. According to IDC:
By 2025, at least 90% of new enterprise apps will embed artificial intelligence. Most of these will be AI-enabled apps, delivering incremental improvements to make applications “smarter” and more dynamic.
How Can You Benefit from AI in the FMCG industry?
The bigger the company, the higher the number of challenges in all kinds of operations. With many departments, transactions and documents, it looks like running a company without repetitive and tedious work is unavoidable. However, in every area, where there’s a lot of data, there’s also a place for optimization, which leads to higher revenue and more effective decision-making. Let’s see some examples of where AI can bring the highest value for the FMCG companies.
Improving Sales and Customer Experience
At the end of the day, all company’s operations need to be reflected in better sales results – that’s obvious. But before we dig deeper into the FMCG companies’ processes, let’s focus on the sales team itself.
In the Fast Moving Consumer Goods area, salespeople have to focus not only on building relationships but also on a lot of paperwork, planning, and predictions. There are many long-term contracts and frequent orders, and that means a lot of repetitive, analytical work – which takes a lot of time. Because of that, the sales process lacks this important human factor – there’s not enough time to actually talk and find out what customers really need. On the other hand, the customers, whether B2B or B2C, expect to be heard and recognized, and if they see that the salesperson made an effort to understand their needs, they are more willing to talk and buy. Simply put: without taking this effort, it is hard to gain customer’s trust and close the deal.
So where exactly is the place for Artificial Intelligence in FMCG companies? According to McKinsey’s examination, AI can have the greatest impact in the area of sales and marketing.
AI use cases: sales and customer experience
There are many ways in which technology may help with sales and customer challenges. Just to name a few:
- AI-powered solutions can improve FMCG sales forecasting and targeting,
- sales performance can be increased thanks to automating simple tasks,
- the average cart value can be increased by applying personal recommendations in the newsletters.
Time is money and it’s better to spend it on higher-value activities than things, which can be automated thanks to Artificial Intelligence or even some simpler Robotic Process Automation.
A good example of how operations can be optimized with the help of AI is the use case of a recommendation system suggesting salespeople which customers they should target and how to do it right. With such a solution, they can reach the right customer with accurate, personalized offers and all this at the exact time the customer needs it. No need to say that it impacts sales conversion, right? According to Bloomreach, up to 80% of shoppers are more likely to buy from a company that offers personalized experiences.
Thanks to AI solutions, salespeople have more time for the work they do best – building good relationships with their customers. That’s how they can use their full potential and bring real value to the company and their customers – technology is boosting productivity and profitability at the same time. The sales team doesn’t have to perform actions based on guessing or randomly choosing customers to contact or offer to make. On the other hand, the time-consuming personalized offer preparation is done by an AI-based tool. When you combine an AI-powered recommendation system with good sales skills, you can have more closed deals and prolonged contracts.
Managing Supply Chain Efficiently
Another great area where AI can be used in the FMCG industry is related to supply chain management. Specialists face many challenges in this complicated process, as it includes systems of people, activities, technologies, information, and logistics – this is all that it takes to move a product from supplier to customer. All decisions have to be made based on the information shared across all the organizational units and geographical locations – with historical and real-time data. Mistakes can cause problems like running out of stock, delays, higher costs, high wastage levels, bad inventory management, and eventually millions of dollars in lost sales.
A lot of these might be taken care of by Artificial Intelligence technology. According to the AI in Supply Chain Management Report, by 2025, as much as 60% of supply chain efficiency gains will be due to AI in supply chain management market solutions. It’s quite impressive, isn’t it? AI-powered solutions can improve a lot in FMCG supply chain – from process automation, through reduced redundancies, improved demand or supply forecasting, faster deliveries with more optimized routes to decision-making, and all these result in cost reduction.
Read also: 10 use cases of AI in manufacturing
AI use case: demand prediction
A great real-life example of how to benefit from AI is the case of 7-Eleven. This FMCG company decided to improve in “out of stock” situations by using machine learning techniques to estimate the demand for different goods. Based on historical sales, out-of-stock conditions, weather, store demographics, and more data, or additional information specific to the chosen location, AI suggests what to order. The company has already processed a billion transactions to train the models and it will be 100 times more processed once fully rolled out.
Organizing The Paperwork
Running a company in the Fast Moving Consumer Goods sector requires a lot of documentation – invoices, reports, contracts, permissions – you name it. Making sure that you have all the necessary documentation is one thing, but having everything in the right order, easily accessible is a different problem. Invoices must be paid, contracts and permissions must be prolonged or terminated at the right time. All this documentation has to be organized and sorted.
Employees have to spend countless hours on organizing, checking, refiling documents, and all this done… manually. However, regardless of how much you have already improved the process, there is always a risk of having some document filled or sorted incorrectly. We all want to improve productivity in every aspect, but the “protein algorithm” has its limitations. As humans, we simply make mistakes.
AI can help the administration employees clean the documents up, which leads to improvements in efficiency and quality of work. AI-based tools can ensure employees find the right documents quickly and reduce the risk of errors. Yes, technology can organize documents, analyze them, and correct metadata – meaning that your team does not need to do it anymore and can focus on more creative tasks that require a human touch.
Read also: What can AI do for your business?
AI use case: contract reviews
There is a great real-life example of using AI to optimize the processes around the paperwork from Deloitte: a DocQMiner app that can analyze contracts. It’s a user-friendly application that can be used by analysts to review contracts. How does it work? The app features a bot named Robin. After feeding him with a number of contracts, Robin gives suggestions of what needs to be reviewed, for example, the start date of a contract. It saves a lot of time as the number of contracts to review is high. You can read about this amazing AI-based app at the Deloitte site.
Read also: AI in software development
Better Usage of Data in the FMCG sector
It all leads to being data-driven. Drawing good conclusions and making the right business decisions require a lot of data analysis behind them. And at a certain scale, it’s simply impossible to perform it manually.
As there’s a lot of historical and real-time data to process, Artificial Intelligence has a lot to do in the FMCG industry. Applying predictive analytics helps you make use of all that data and find new opportunities for your business. You can get much more value out of the data you already have, unify that data, and make accurate predictions.
AI technology can use data from multiple sources and build a store of knowledge, which brings us to having more accurate predictions about the whole business and customers. Machine learning and deep learning use data – including demographic and behavioral patterns, purchase history, etc. – to learn and generate new rules for future business analytics. Intelligent machine learning systems can help data scientists with providing business solutions and predictions, e.g. more efficient marketing strategies and customer service improvements – both based on predicted customer behaviour and better customer insights.
What’s important, though, is that in order to use their data with full potential, FMCG companies need to bring AI on board and combine it with human judgment. AI takes care of processing the data but there are pieces of information that are crucial for coming up with a good conclusion and business decision but difficult to present in a form that would be “digestible” for AI – like vision statements, strategies, values, market dynamics and more. The final result of the AI-driven decision-making process is that AI generates possibilities from which humans can pick the best alternative given the additional information they have access to. Employees save time by not interfacing directly with data but rather with the possibilities produced by AI.
Good usage of data is crucial in the FMCG sector for many areas, such as releasing a new product, improving customer journey (which includes good quality customer service and shopping experience), sales forecasting, product placement, and much more. To make improvements in these and other areas, you have to use your data properly and analyze it properly as well.
Besides using AI solutions for processes inside the company, we can already hear and read about amazing features for customers. One of the recent examples of applying AI to FMCG companies was Olay (Procter & Gamble). They released a platform which analyzes users’ skin and provides personalized skincare routine based on skin age and concerns. The results were amazing! As we can read in the case study, personalized recommendations lead to having a 40% larger basket size upon check out as compared to regular visitors.
How to Get Started with AI
As you can already see, AI-powered solutions might be widely used in the FMCG industry. No matter what’s your business area of focus – they help to achieve better results.
AI technology is here to reduce company’s costs, boost employees’ effectiveness, help with the paperwork, make better use of data you have, and much more. At the end of the day, it much reflects on revenue.
You already know the areas, which can benefit from Artificial Intelligence, that’s the first step. We prepared an AI adoption diagram with all the necessary steps, so you can see what’s the process and how to get on board with it. Hope you’ll find it useful!
Take your time, use the knowledge we share, and think about how Artificial Intelligence can benefit your business. If you need some more information – we are here to help.
