How Artificial Intelligence Will Benefit the FMCG Industry


Eric Wale

By 2035, Artificial Intelligence (AI) will have the power to increase productivity by 40% and boost profitability by 38%, according to Accenture. 92% of senior manufacturing executives also believe that artificial intelligence and robotics will help improve their degrees of productivity (The Manufacturer: Annual Manufacturing Report 2018).

And if we look at the bigger picture, studies show that Australia could benefit from $2.2 trillion of economic growth over the next 15 years, if companies adopt AI (Google, 2018). Furthermore, the value of AI is estimated to be worth $36.8bn globally by 2025, predicts Tractica.

It’s globally recognised that artificial intelligence and robotics are set to change business models for the better, but we don’t tend to hear so much about how they’re going to change supply chains, specifically in the FMCG sector.

In this article, we delve deep into how exactly AI will change the FMCG industry, and how it will benefit Australian companies battling it out in the competitive FMCG space.

But first, what is artificial intelligence?

“Artificial intelligence is the development and use of computers to perform tasks that traditionally require human intelligence, such as visual perception, speech recognition, and language translation. With AI, computers learn from data sets to understand underlying data structures and uncover procedures to make the correct use of the data” – RocketSpace

Product Placement

Choosing the best location for a product can be a difficult task. Factors such as what the target demographic is buying, when they are buying it and what products go well together– all need to be taken into consideration to make a good product successful in the commercial space.

A great way that AI can help companies is through a planogram – a very smart program that can tell FMCG retailers where each product should be placed, how much stock to have on that product, and what the price should be in order to maximise profit.

Improving Efficiency

It used to be difficult for FMCG companies to identify areas where operational efficiencies were required in their supply chain. Thankfully, advanced algorithms can now analyse entire production lines and quickly pinpoint inefficiencies.

For example, AI can tell a company about their wastage levels, potential security lapses and food safety standards that need to be improved. Think of AI like an efficiency personal assistant!

Maintaining Sustainability

Sustainability is another massive concern for the FMCG sector. In the past, it has been difficult for companies to assess how they are performing against sustainability benchmarks due to the complexity of global supply chains.

However, with the expansion of AI and machine learning programs, businesses can now obtain real-time insights to help them assess their corporate sustainability performance on issues such as food waste and palm oil sourcing.

The Customer Journey

The customer journey is another part of the FMCG process that can benefit highly from AI and robotics. Nowadays, the customer journey and relationship has shifted to online platforms, so it’s important that FMCG companies consider how they can deliver services that are tailored to individual customers and create a truly engaging customer journey. By utilising AI, companies are more open to discovering new opportunities and delivering a product that understands its consumer’s needs.

Data Analysis

It’s impossible to collect and analyse large sets of data these days without the help of an artificial intelligence program. And most companies that need to achieve any sort of strategic analysis are struggling without the help of such programs. The most popular type of program that helps with data analysis, is machine learning, which can store, analyse, and learn from past actions and continue to track and store all future decisions.

Furthermore, the data becomes a goldmine for the AI to find new patterns, discover new opportunities, target mistakes or errors, and improve the overall efficiency of the supply chain process over time.

Connecting and Marketing Online

As well as mapping the customer journey online, AI can also help companies reach their customers and community online. In the coming years, consumers will use newer technologies like augmented and virtual reality, haptic feedback for sensory experiences, and algorithmic storytelling. As demand for these immersive interactions increase, underlying network and infrastructure will require more strength, as will FMCG company’s marketing and digital strategy.

Challenges with Adopting Artificial Intelligence

Global research firm, Forrester, recently found that 58% of business and tech professionals are researching AI systems, but only 12% are currently using them.

Integrating AI into legacy information and communications systems will deliver significant cost, time and process-related savings quickly, so why aren’t more FMCG companies embracing it?

Perhaps one reason is that companies lack connected systems. 36% of Global News Wire survey respondents indicated that they have separate demand planning, replenishment, allocation and order management systems for store and e-commerce orders.

That combined with the fact that 28% don’t manage each of their modules on the same platform, it becomes clear that disparate demand replenishment systems are a significant burden to efficiency.

The survey also revealed innovative products are slow to be put out on the market, with 43% of supply chain professionals saying their technology can’t keep up with business demands.

Keeping up with the Changes

The future for the FMCG industry in Australia is positive and exciting. With AI and robotics set to bring new opportunities for commercial growth, sustainability monitoring and operational efficiency, businesses should have the approach that “anything is possible”. And instead of looking into the future with trepidation; rather, they should grasp the opportunities at their disposal.

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