Stephen DeAngelis is its CEO and Founder Enterra Solutions.
Geopolitical tensions such as the war in Ukraine and the conflict in the Red Sea are disrupting the flow of raw materials necessary for everyday goods. The ripple effects of climate change, such as low water levels in the Panama Canal, lead to prolonged maritime delays and subsequent product shortages. Population shifts affect fluctuations in consumer demand as new shoppers with different food preferences enter existing markets, requiring increased flexibility in the supply chain to meet changing demand signals. Economic uncertainty and inflationary pressures are quickly affecting shopper behaviors and brand loyalty. And the pricing implications of post-pandemic freight market volatility, overcapacity and labor shortages have narrowed the margin for economic error.
Combined, it has created a perfect storm of complexity at a time when value chain optimization and decision making have never been more vital to business health. Considering supply chains directly affect 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 shows that 44% of consumer packaged goods (CPG) leaders “plan to increase their use of technology for supply chain management” in 2024.
Intelligently leveraging data from enterprise systems of record (SOR) and engagement (SOE) to drive effective optimization and decision making is imperative to weathering the storm. However, as many organizations have learned since the pandemic, these data foundations are only as strong as their ability to act accurately at speed and scale. Gartner researchers found that more than half (52%) of digital supply chain decisions “came too late due to the time it took to conduct digital exchange analysis,” highlighting the growing need for more integrated, flexible and autonomous capabilities.
This has created space for a new solution architecture called systems of intelligence (SOI), a ready-to-use 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 in line with evolving conditions. SOIs have historically been unfeasible due to technological limitations, but the emergence of next-generation technologies such as genetic artificial intelligence and autonomous decision sciences have made them possible. Through comprehensive adoption of SOI architectures, CPG and retail organizations can leverage their data to mitigate risk, manage volatility and maximize business value despite the chaos around them.
Enhancing the CPG value chain with systems intelligence
SOIs can be integrated with an organization’s existing SOR and SOE applications, combining human logic and genetic AI with transparent glass-box machine learning and nonlinear optimization. It serves as the central “brain” of a company by automating the analysis of large, complex data sets to generate prescriptive and predictive insights about supply chain optimization as well as consumer preferences, revenue opportunities and forecasted demand. SOI then facilitates the continuous application, monitoring and improvement of this information throughout the value chain. Leveraging SOIs with this capability helps build resilience to volatility and enhance competitiveness. This enables global businesses that face thousands of decisions a day to operate efficiently and become leaders in their market segment.
An example of this value chain optimization in action is flexible demand forecasting. SOIs support flexible advanced demand forecasting by integrating consumer insights and revenue optimization data to perform nonlinear optimization of demand and supply planning. Based on their own holistic intelligence, these tools can generate accurate forecasts on the baseline demand forecast for specific products, price points, times, locations and more. This enables organizations to optimize supply chain planning for timely delivery of raw materials and product volumes needed to meet fluctuating demand signals, reducing the risk of lost revenue from unexpected disruptions and excess inventory.
Driving successful system intelligence adoption
Driving the successful adoption of an SOI solution architecture requires a strategic approach based on the intersection of value realization, data maturity, and subject matter expertise.
Start by identifying manageable, yet impactful use cases that can get quick value from enabling SOI. For example, developing a pilot project for a high-priority business class that has sufficient data available and a mature management team is an effective way to make SOI adoption successful. Limiting the initial pilot to one or two major categories and two retailers ensures that it is manageable, but still provides a large enough model to build a compelling business case for full development around it. Additionally, this type of pilot can help ensure collective buy-in among cross-functional stakeholders to enable effective change management processes when implementing SOI.
Successful SOI adoption also depends on adequate databases. Part of what SOI does is human reasoning about data that comes from many 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). , including. This makes data maturity non-negotiable. Ensure your data foundation is strong, secure and stored in cloud-based environments for seamless accessibility and integration.
It is also important to remember that successful SOI adoption is ultimately driven by people. Leveraging solutions that incorporate human reasoning and autonomous decision science is inherently complex. In turn, there must be internal alignment and access to subject matter expertise to effectively facilitate the end-to-end implementation lifecycle and scale the use of SOI over time. Prioritize building the right people by aligning your internal business, technology and data teams and partnering with established external partners with expertise in your industry and use cases.
The rise of SOI looks like a powerful paradigm shift in how enterprise data will be used to drive value, competitiveness and resilience. CPG businesses that embrace SOI adoption will be able to not only meet the challenges of 2024 but also unlock new levels of customer visibility, operational agility and sustainable growth for years to come.
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