How AI can transform the FMCG Sector in the Coming Days

Authored by Manish Aggarwal, Director, Bikano, Bikanervala Foods

The role of technology has been instrumental in providing a competitive advantage for FMCG companies over a significant period of time. Numerous companies are already reaping the rewards of digital transformation initiatives, ranging from early-stage implementations to comprehensive overhauls. Considering this, it is intriguing to observe the immense benefits that Artificial Intelligence (AI) brings to FMCG companies, enhancing efficiency and effectiveness across various business functions. It is evident that the global FMCG/CPG ecosystem is swiftly recognizing the burgeoning AI opportunity.

AI offers FMCG companies the ability to gain predictive insights into customer behavior, enhancing the delivery of superior consumer experiences and fostering enhanced engagement. Moreover, AI empowers extensive process automation, resulting in cost reduction and time savings. According to an IBM survey, retail and brand executives anticipate that intelligent automation capabilities can potentially reduce operating costs by an average of up to seven percent.

Various Approaches in which AI can revolutionize the FMCG sector

FMCG companies have much to gain from embracing the progressions in data-driven technologies such as AI, ML, and deep learning. In the Fast-Moving Consumer Goods (FMCG) sector, Machine Learning (ML) and Deep Learning have brought about transformative changes. With the enormous amount of data generated in the FMCG industry, ML techniques enable companies to analyze consumer behavior, preferences, and purchase patterns, allowing for better understanding and segmentation of target markets. These insights help FMCG companies optimize product placement and pricing strategies, personalize marketing campaigns, and forecast demand more accurately. Additionally, Deep Learning's advanced image and speech recognition capabilities have improved supply chain management by enhancing inventory tracking and quality control processes. By leveraging ML and Deep Learning in the FMCG sector, companies can achieve greater efficiency, competitiveness, and customer satisfaction, making data-driven decisions that positively impact their bottom line. Below are a few examples of how the FMCG industry can reap the benefits of AI.

Enhancing Operational Efficiency in Supply Chains

In the past, FMCG companies faced challenges in identifying areas within their supply chains that required operational improvements. However, thanks to the advancement of sophisticated algorithms, it is now possible to analyze entire production lines swiftly and accurately, pinpointing inefficiencies.

For instance, artificial intelligence (AI) can provide valuable insights to companies regarding wastage levels, potential security vulnerabilities, and areas that require enhancement in terms of food safety standards. AI functions as a diligent personal assistant, dedicated to optimizing efficiency within FMCG operations. 

Optimizing Product Placement

Determining the ideal placement for a product can be a complex endeavor. Several factors, including the purchasing behavior of the target demographic, timing of purchases, and product compatibility, must be carefully considered to ensure the success of a product in the commercial space.

Fortunately, AI offers valuable assistance through the implementation of planograms—a visual representation or diagram used in retail stores to plan and organize the placement of products on shelves or display areas. By utilizing planograms, retailers can determine the precise location for each product, establish appropriate stock levels, and set optimal pricing strategies to maximize profitability. This innovative approach leverages AI's capabilities to optimize product placement and drive commercial success. AI can optimize shelf space allocation by considering product popularity, sales velocity, and other relevant factors. By doing so, retailers can ensure that the most profitable and high-demand products receive the appropriate space on the shelves.

Forecasting Demand and Inventory Management

Understanding customer demographics opens up a world of opportunities for companies, and AI plays a vital role in aggregating and analyzing crucial customer data points. By employing machine learning and deep learning algorithms, companies can effectively interpret these rich customer data sets to enhance their demand forecasting strategies. This empowers companies to proactively respond to customer demand in the most efficient manner.

For instance, AI-driven demand forecasting enables companies to devise optimal approaches to cater to evolving demand in rural areas, allowing them to develop communication and messaging strategies that align with these changing realities. Additionally, AI facilitates the maintenance of optimal inventory levels by leveraging demand-gap analytics. Inventory management, which can pose significant optimization challenges for FMCG companies, can be greatly streamlined with the aid of AI technology.

Customized Consumer Experiences

In today's business landscape, companies are harnessing the power of artificial intelligence (AI) to revolutionize customer experiences, taking them beyond the ordinary. By transitioning from reactive to proactive and even predictive approaches, a new paradigm of customer service is emerging, particularly relevant for fast-moving consumer goods (FMCG) companies. Leveraging customer data and insights, businesses can now curate proactive experiences that provide comprehensive support and guidance to customers, even before they articulate their needs. This proactive approach is made possible by analyzing vast pools of customer data, enabling the identification of demand patterns and facilitating cross-selling or up-selling through personalized recommendations. By leveraging AI tools, companies can achieve real-time intelligent customer engagement. When guided by insights that address genuine customer needs, this strategic approach adds significant value to the overall brand appeal.

Final Say

Consumer demand fluctuations hold numerous correlations and patterns, presenting a wealth of valuable information for FMCG companies. Unearthing these insights is crucial for gaining a competitive advantage in the industry. FMCG companies must process this data to devise effective strategies, such as product placement, product prioritization, workflow optimization, marketing segmentation, pricing decisions, and offer launch timings. The FMCG landscape requires comprehensive planning and streamlining, which can be accomplished through the utilization of advanced tools and algorithms. Consequently, an increasing number of FMCG companies are embracing AI-driven automation to redefine their customer experience and enhance brand engagement.