AI-enabled automation: a new era of efficiency in the FMCG industry

Increasing profitability in highly competitive sectors is a major challenge for companies. This is especially felt in the highly competitive FMCG sector, where customers and dealers are becoming increasingly demanding, despite increasingly personalized offers and services. 

Automation in the FMCG industry

The need of the moment for FMCG companies is to automate better decision-making driven by highly accurate predictions of user behavior. Improving operational efficiency, keeping in mind customer choices, changing demand patterns, etc., helps companies maintain profitability. Here in particular, the overall goal should be to improve the customer experience, which can be achieved by gaining key consumer insights. However, this activity must also be profitable. Therefore, these insights must be automatically generated from data collected from consumers, intermediaries and across the supply chain, as well as from stakeholders and decision-makers from within the organization.

Automation using AI can be used by FMCG companies in the following business areas:

  1. Increase efficiency of administrative processes
  2. Optimization of the supply chain
  3. Personalization and service efficiency
  4. Maximizing marketing efficiency
  5. Efficiency of product development

Increase efficiency of administrative processes

Managing an FMCG company requires a lot of documentation – invoices, reports, contracts, permits. Making sure all the necessary documentation exists is one thing, but having everything in the right order, easily accessible to the right people, is a whole other problem. Invoices must be paid; contracts and permits must be renewed. All these documents must be well organized and sorted.

Often employees have to spend hours organizing, checking, re-organizing documents, and all this often by hand. However, no matter how much the process is described and implemented, there is always the risk of a misfiled or mis-sorted document. “Protein algorithm” has its limitations. As humans, we simply make mistakes.

AI automation can help service and administrative staff sort out documents, leading to improvements in their efficiency and quality of work. AI-based tools can ensure that employees find the right documents quickly and reduce the risk of errors. Yes, technology can organize documents, analyze them and correct metadata – this means that teams in the company no longer need to do this and can focus on more creative tasks.

Optimization of the supply chain

Another significant area where AI can be used in the FMCG industry is in supply chain management. Professionals here face many challenges in this complex process, which involves systems, people, processes, the application of technology, information processing and the organization of physical logistics – all of which are needed to get a product from supplier through intermediary to customer. All decisions must be made based on information shared across all business units and geographic locations – using historical and real-time data. Mistakes can cause problems such as poor inventory management, stock shortages, inadequate logistics resources, delays in deliveries to stores, lost sales opportunities, and ultimately losses running into many millions.

Many of these problems can be solved by artificial intelligence technology. According to the AI in Supply Chain Management report, by 2025 as much as 60% of the gains in supply chain efficiency will come from AI market solutions in supply chain management. AI-based solutions can significantly improve many aspects in the FMCG supply chain – from automating demand and supply planning processes, reducing shelf shortages, improving demand and supply forecasting, inventory and warehouse management, faster deliveries via more optimal routes – all leading to lower costs.

What’s more, AI can help FMCG companies ensure compliance with regulations and safety standards. When regulatory requirements are fed into AI-powered systems, they can be monitored for any violations. By influencing processes such as identifying defective substandard products and gaps in food safety, AI can significantly improve the quality of delivering the right products with the planned timing and sales channels in real time.

Personalization and service efficiency

Automated access to real-time consumer data provides insights into consumers’ shopping behavior. Predictive analytics, using historical data on these patterns, can flexibly help accurately forecast purchase preferences and anticipated demand for a portfolio of FMCG products and enable different ways of personalization. It also helps make more accurate business decisions related to the continuous optimization of product assortments, their pricing strategies and pricing models like dynamic pricing tailored to consumer demand and elasticity, freemium approaches, segmented pricing ladders, etc. This consumer-focused approach builds higher business value, reduces operating costs and at the same time is in line with individual customer needs and capabilities.

An important area of automation using AI is also excellent service to business partners and consumers. Here, the shopping experience is constantly being improved using chatbots or voice bots. Using them to provide 24*7 service automation results in reduced time and costs. Virtual assistants can also help suggest products while shopping. AI-based applications can also monitor all sales channels and systems to match supply, as well as better protect against hacking. AI-based applications can also suggest product placement and shelf placement so that consumers can find it in a store.

Maximizing marketing efficiency

Personalizing communications is key in the FMCG world, where consumers are inundated with similar products from competing brands. AI helps identify unique buying patterns and preferences to create more relevant and engaging marketing messages. For example, algorithms can predict when a customer might be most receptive to certain offers and automatically deliver personalized push notifications or personalized social media ads.

The ability for dynamic A/B testing, real-time personalization and automated optimization of advertising content are just some of the capabilities now available to FMCG marketers.

This makes it possible to reduce marketing budget waste by avoiding ineffective campaigns and directing resources where they have the best chance of success.

Efficiency of product development

AI-based automation is opening up new opportunities for FMCG companies in the new product development process. Machine learning algorithms identify increased interest in specific ingredients, flavors or product features. This allows companies to respond more quickly to changing preferences and market needs, shaping their assortments accordingly.

AI can also analyze how changes in ingredients will affect a product’s taste, shelf life, nutritional value or other key features, as well as predict the likelihood of market success by analyzing historical data and comparing a new product’s features with those of existing successful products on the market or those that have not been successful.

Conclusion

In summary, FMCG companies are implementing AI-based automation to optimize decision-making and operational processes. Artificial intelligence enables them to accurately predict consumer behavior, streamline the supply chain, personalize the shopping experience and maximize marketing efficiency. With AI, these companies can not only increase efficiency and reduce costs, but also innovatively develop and adapt their products to rapidly changing market needs.

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Piotr Dreszer
Venture Architect
At Innovatika, he works as a Venture Architect. Passionate about implementing real-world applications of Design Thinking and applying his product development expertise. Over 25 years of experience in business - from corporations to startups.

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