Disruptive tech is coming to CPG, including blockchain, AR (augmented reality) and VR (virtual reality), smart packaging, and, notably, AI (artificial intelligence). These technologies will revolutionize logistics in CPG—for instance, by reducing supply chain gaps and enabling more collaboration within the value chain. It will drastically improve brands’ insight into their customers’ habits, preferences, wants, and needs, and it will enable hyper-personalization. It will further evolve the retail experience, and, as Cohen hinted at, it will help companies capitalize on the power of prediction—staying ahead of buying trends, enabling predictive maintenance, supporting proactive reordering, and so on.
IIoT = Traceability and Optimization
From an industrial point of view, the IIoT (industrial IoT) is enormously attractive to CPG companies. Simone Gianotti, EcoStruxure business development manager at Schneider Electric, says the IIoT is gaining momentum in the CPG market, and its adoption is becoming more the rule than the exception. “Many companies have already started exploring digital, connected solutions in their operations. They have seen the benefits of those initial investments and are working to build on them by connecting more and more pieces of their operations,” Gianotti says. “These connected technologies are allowing the CPG segment to optimize operations and benefit business in different ways, from offering greater process insight and efficiency to supporting the workforce with new training tools and enhanced machine safety.”
From Gianotti’s perspective, there are two key benefits of leveraging the IIoT throughout the retail value chain: end-to-end traceability to increase transparency and process insights to reduce cost. “First, the traceability allows CPG companies to follow their products from the initial stage of how ingredients are sourced through the delivery and sale of the products themselves,” he says. “Using milk as an example, this would allow a diary company to track from the farm where the cow is milked to the store where the consumer eventually purchases that milk. This ability provides a new trust with transparency through the complete value chain.”
Second, process optimization allows players throughout the value chain to reduce their operating costs and increase process efficiency. “By having greater insight into their respective processes, operators can understand those systems better and make more informed decisions, implementing realtime changes to optimize those operations,” adds Gianotti.
“By monitoring power usage, tracking machine cycles, and scheduling maintenance, operators can increase production and reduce costly downtime to increase profitability.”
The IoT also offers tremendous potential in logistics and customer service. Rajkumar Venkatesan, thought leader in marketing, CRM (customer-relationship management), and automation and a professor in the University of Virginia’s Darden School of Business, says IoT technologies are tracking deliveries to stores and providing customer service at the point of consumption. “For example, 3M (Filtrete) smart filters have sensors that help with better air filter replacements and air quality monitoring,” he says. “In addition to the 3M example, (Coca-Cola) Freestyle vending machines have sensors that transmit information back to the company about consumer customization of drinks. This provides Coca-Cola (with) better stock flavors in the vending machines and also (helps them) introduce new products.”
The next stop for many industries looking to drive digital transformation, including CPG, is AI. AI enables future machine-driven decisions and actions to be made based on realtime data. In the CPG world, AI has the potential to automate the historically semi-automatic decisions that have driven replenishment and production scheduling. Venkatesan says using data and AI is also the key to personalizing the all-important customer experience.