Inflation is a constant concern for both consumers and consumer packaged goods (CPG) manufacturers, but it’s especially problematic in 2021.
With the Consumer Price Index up 5.4% in June — the largest increase since August 2008 — few enterprises will be able to escape the economic challenges ahead. Brands like Campbell’s and General Mills have already raised or will raise their prices to keep up with skyrocketing inflation. Others have indicated that they hope to keep their price hikes to a minimum by finding ways to reduce their expenses. Many of these companies are still reacting to supply chain difficulties that began brewing in 2020. Rather than relying on reactive strategies, CPGs are better off preparing for future obstacles and more actively tackling inflationary pressures by relying on real-time data.
With real-time data, businesses can gain greater visibility and insight into their supply chains and identify where to cut costs, how and when to pivot, and how to make smarter, more informed decisions. Real-time data makes it possible to differentiate between supplier advantages and disadvantages, allowing businesses to make fast and necessary changes when there are delays, shortages or other issues that could hinder production. From disruptive events like a global pandemic or the Suez Canal blockage, to smaller, more region- or industry-specific problems, continuous, real-time data is essential.
According to a report by Accenture, nearly three-fourths of CPG executives are struggling to scale data and analytics capabilities across their businesses. But almost all recognize that advanced analytics are critical. Indeed, data makes all the difference. It can help organizations identify how to shift gears to decrease the impact of rising prices — or better yet, how to benefit from them. One way to do this is through trend-tracking.
Plant-based burgers, for example, are inching closer in price to traditional beef-based burgers. As the price of beef increased, the price of veggie alternatives decreased, creating an opportunity for alternative meat makers to cash in. These newer, meat-free burgers only make up a small fraction of the overall burger market, but their growth represents a unique opening for those equipped to enter the space.
With real-time data, CPGs can take a closer look at other trends and determine the best course of action during any difficult period. The end result will mean the difference between success and failure, or a company that’s surviving and one that’s thriving.
With real-time data, organizations can make smarter and more informed decisions that are driven by insights, not instinct. This is especially important at a time when select products and supplies are running short, and prices — influenced by availability, labor shortages, wage increases and supply chain hiccups — are rising.
CPGs need to be able to dig beneath the surface of these challenges and see what’s really going on. By tracking on-shelf availability, data can help businesses prevent or reduce losses of sales due to out-of-stock items. Data can also track key performance indicators (KPIs) across retailers to optimize marketing performance and effectiveness. These are the insights that CPGs need as they search for answers to their every question.
They also need data to answer questions they don’t even know they have. With continuous intelligence — in other words, real-time, up-to-date information — businesses can gain a genuine strategic advantage, targeting the right customers and improving day-to-day operations. Data users, from the executive team all the way down to new recruits, can learn so much more from real-time data than they can from data that’s gathered after the fact. By then, the information is likely out of date — and even if it isn’t, it’s often too late to act on it. In today’s highly competitive market, businesses can’t afford to make decisions with old data. They need accurate insights that they can use to make smarter decisions right now, turning obstacles into opportunities.
When inflation strikes, many brands are tempted to raise prices, which could limit the number of products that people can afford to buy. This may also have an impact on restaurants and other sectors that rely on food and beverage products to increase revenue, such as movie theaters or bowling alleys. As they raise prices to keep up, consumers may have to reconsider how and when they spend their money.
Higher fees are not the only way for businesses to respond to inflationary pressures. While certain costs will undoubtedly increase, organizations can rely on the power of real-time data to alleviate some of the pain points caused by inflation. Without real-time data, organizations may not immediately recognize that one supplier is cheaper than the other, or that some countries are able to export ingredients at a faster rate, while others are struggling. These are the invaluable insights that CPGs need in good times and in bad. Whatever the climate, real-time data reveals solutions to any problem that may emerge, as well as creative opportunities for enterprise growth.
Poornima Ramaswamy is executive vice president of global solutions and partners at Qlik.