The world is changing at pace and our preferences as consumers are more complex than they were a decade ago. The next generation of consumers are more experimental and granular than those before them, which makes it harder for organisations to understand and predict their ever-changing needs.
The tools available to deal with this explosion in data were not able to keep up – until now. We are now at a tipping point, with FMCG retailers and manufacturers on track to invest over $20 billion in big data over the next 3-5 years.
The volume of data available now is greater than ever, but it is dealing with this in an effective way that is the real challenge. To keep up, businesses must embrace innovations in data and data analytics like artificial intelligence (AI), which has the potential to revolutionise the sector.
By automating standard processes, it makes it possible for retailers and manufacturers to make smarter decisions faster and more effectively. To do this, AI needs to work on a powerful data integration and management system that makes it possible to integrate complex, multi-source data.
AI systems can scour analytical databases at a speed that humans are unable to match. The systems can point us in new and different directions whilst insights are generated in real time.
Four years ago, Accenture released research that predicted the impact of AI technologies; to increase productivity by 40%. Essentially the technology will take over a lot of the repetitive and predictable elements of human roles allowing them to work more efficiently and creatively.
Whereas the role of the data strategist used to be about combing the data to find patterns, facts and uncover new truths, their role now is to ask the right question of the machine. AI and also machine learning (ML) can significantly remove the churn element of this role, but they still need guiding.
Organisations now need to reinvent themselves in order to win at AI. This is perhaps the biggest challenge as cultural change is in many ways harder to achieve than technological. Strategists will need to have a strategic business understanding, as well as the science, in order to unlock the truths that enable their business to grow.
Embracing AI and also ML makes it possible to democratise data; the systems do the technical element and make it possible to provide the actionable insights to the individual doing the job. In a retailer, for example, this could mean that the systems identify trends that could lead to an out-of-stock problem in stores and automatically send the alert to the relevant people. Without having to sift through reams of data, they have the information they need to adjust stock levels and so key sales opportunities are not missed. These monitoring and alert processes could apply to any part of the business, including crucial sales levers such as sales promotions and pricing.
Successful companies in the future will be those that are able to develop a data-driven culture where data is a core part of the mindset of all employees and everyone can make better, faster decisions.
How AI can enable strategic development
Organisations need to have a deep understanding of the customer to guide their strategy and future thinking. AI (and ML) are part of the toolkit for the strategist to achieve this, by elevating the strategic development process to an entirely different level. Their ability to search through a virtually unlimited number of digital sources makes them totally unique, and the system will continually fine-tune itself so that it can evolve and create more relevant results.
There are three key areas that AI and ML can be used to support strategic development within FMCG businesses:
Future scoping: looking at consumer behaviour, trend spotting, identifying innovation opportunities.
Operational: revenue management (for example pricing and promotion), retailer collaboration, assortment and media
Monitoring: automating insights, identifying out of stock and price gap issues, alerting to fast-moving items at a competitor
AI can unlock opportunities that are not normally identified, and they anchor them in consumer and financial value. AI has the capacity to process the volume of conscious and non-conscious data that already exists. This means that the innovation process can be reimagined and much more quickly than it could in the past.
AI and ML have the power to transform data into useful information that enables better business decisions. Whilst they are game-changers, the key point to remember is that they are tools – they serve us not the other way around. Knowing how to get the best from them is the challenge that businesses now face.
Written by Andrew Appel, President and Chief Executive Officer, IRI.