Drive profitable growth during times of economic uncertainty with generative AI

The economy has taken many hits since 2020. Businesses have had to get smarter and more strategic about remaining stable among supply chain disruptions, fears of recession, and geopolitical conflicts. But with the right strategy and tools, consumer packaged goods (CPG) organizations can still thrive.

How? By embedding richer data and more advanced analytics into assortment, price, and promotion planning and implementation for continuous improvement of category and channel plans. This approach can protect profitability even when economic conditions are less than ideal.

Integrating advanced data and analytics into planning and execution can help organizations improve go-to-market plans and overcome bottlenecks that hinder speed to market. The result? Plans that can deliver in-market impact.

Taking it a step further, companies can develop faster, more agile, and more successful planning and execution cycles when they integrate gen AI taking sales planning from months to minutes.

But first, the basics.

Before leaping into generative AI, get back to the basics of planning by investing in advanced data and analytics for better sales forecasting. Advanced modeling and artificial intelligence will automatically generate plans and scenarios with the highest statistical likelihood of success in the market, taking into account shopper behaviors, macro- and microeconomic factors, top-line revenue and profit targets, and supply constraints. These insights will help optimize product assortments, pricing, promotion, and planograms at channel, account, and even store/store-cluster levels.

This approach also allows you to:

• Increase revenue and the associated profit margin contribution
• Improve your ability to obtain buy-in from retailers
• Improve order management and reduce the cost per order
• Improve supply chain planning and forecasting
• Optimize back-end financial deductions and settlements, reduce leakage, and eliminate unplanned write-offs

Refining your sales planning capabilities will prepare you to weather storms of uncertainty. And for flawless execution, make sure your front, middle, and back offices are connected and operating in lockstep (more on this later).

With a foundation of data and analytics, your company will be well-positioned to use gen-AI technologies to create value for your organization.

Shopper dynamics change fast thanks to omnichannel options and an ever-changing economic environment. CPG leaders must effectively target consumers with optimized price, promotion, and sales plans - and they can do so quickly with the help of generative AI.

In the context of assortment, price, and promotion planning, gen AI accumulates very robust and relevant datasets to deliver predictive and prescriptive plans with an explanation of why the plan is optimal. This technology can factor in internal constraints and the external market environment including global and local considerations. While it may take humans years to sort through this data, gen AI can do it faster.

Gen AI also provides more context to scenario planning, providing explanations for its suggestions so you can understand the rationale behind its recommendations. Additionally, you can compare your own scenarios against what gen AI technology suggests, and it will compare each plan's performance drivers and their likelihood of succeeding in the market.

This next-generation data and analytics technology also unlocks an opportunity for CPG companies and retailers to build joint business plans for a mutual revenue boost. To achieve this, CPG and retail partners must agree to share their data with a third party that can keep sensitive information confidential and use the rest to produce market plans that maximize shopper satisfaction.

How CPG leaders manage data is core to whether they succeed with AI. Here are four steps that will help your business get the maximum impact from AI and generative AI:

1. Identify and prioritize the problems you are trying to solve
2. Embed analytics in company processes and workflows to drive more agile decisions, actions, and course correction
3. Create strong data management and governance for responsible AI and a cloud-based technical architecture that supports AI at scale
4. Build a scalable operating model that includes programs to nurture new skills and roles for employees

Point two is a crucial step for embedding gen AI into sales and promotions planning. Even with statistically viable plans, front, middle, and back offices must be connected and working collaboratively to execute them in the market.

Generative AI also plays a crucial role in sales and commercial planning. The technology can enable your organization's marketing, sales, supply chain, and finance functions to operate in lockstep and course correct for continuous improvement. Gen-AI technology can also help keep all departments informed so that each function does its part to ensure plans get implemented efficiently and in full.

This next generation of advanced planning and execution tools integrates marketing campaigns, category, and channel/account planning into supply chain forecasting. This is key to ensuring that the right products are in the right place at the right time to increase top-line revenue and profit growth.

The data and performance feedback you receive from market execution can be used to inform and optimize sales plans on a continuous basis, leading to shorter planning cycles. This iterative loop gives CPG organizations the ability to keep pushing out new scenarios, test them in the market, and improve performance in real time – especially in digital channels.

The economy, as we know, can be hard to predict. Markets ebb and flow. But your organization can keep growing if you build a foundation of data and analytics on which to embed generative AI. That's how you can optimize planning and execution cycles to keep functions working collaboratively to increase market share, revenue, and profit contribution.

When done correctly, this approach can sustain profitable growth even in an unstable market environment.