Information is a vital resource for fast-moving consumer goods (FMCG) manufacturers and, in fact, any kind of business to remain profitable, as they need to know how to collect and analyse information about their product.
This is according to Colleen Rose, group director of Smollan, who says many companies see business intelligence (BI) merely as an IT tool used to collect vast amounts of data, store it in data warehouses and generate reports, which rarely lead to any action being taken.
Rose describes BI as the process of gathering data about an organisation, and manipulating that data into information, and then knowledge. "The process is carried out so business leaders can make informed decisions and gain a sustainable competitive advantage."
She says this is particularly important for the FMCG industry as manufacturers collect large amounts of data about their products all the time. This data then needs to be analysed, and based on the results, managers need to make informed decisions regarding their products' performance in the stores.
However, manufacturers do not capitalise on the captured information, Rose adds. "The more they collect, the more difficult it is to manage and focus their needs. This results in a monster warehouse of useless data and wasted resources that is based on a failed understanding of what information drives their business and why they need BI."
She cites the first step to an optimal BI solution as being manufacturers determining and shifting their focus to their business's key performance indicators (KPIs). "In the FMCG industry, these should be shaped to match the manufacturer's needs."
According to Rose, the importance of these five indicators can be highlighted by their effect on sales figures:
To reduce sales lost to out-of-stock by even 1%. When a product is not available on shelves, manufacturers could lose the opportunity to sell their product in that store.
If the pricing is too high compared to the same product in other stores or a competitor's product.
If the vast amounts of money spent on promotions is delivering return on investment.
If the new product is on shelf soon after it has been launched and advertised.
If the product is on shelf in the best possible place, for example, at eye level.
The next step would be to determine the data needed by manufactures to address their KPIs, and how that data needs to be collected. "Retail stores can provide information on the sales of the products periodically, and the manufacturers would need to obtain observational in-store information about the shelf health and execution of promotions."
Rose says the final step involves the manufacturer determining how they would like to view their information in order to make it understood by those needing to take action. A useful method for presentation of information is a dashboard with action reports, highlighting problem stores and areas so they can be managed and resolved, she adds.
"BI is costly to implement and maintain as it requires both IT infrastructures and technically skilled resources," she explains. This is why it is important that information should be stored and presented in ways that will enable decision-making that improves the bottom line of a business.
An effective BI system will not only capture clean data that is actionable, but will also detect the source of each problem. It will enable manufacturers to respond quickly and accurately to rapid shifts in the market and boost their products' performance, concludes Rose.
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