If an orchestra or choir were to all read from different sheet music, you could expect to witness a musical mess. As you listened, it would quickly become apparent to you that something wasn’t right. This picture of a performance totally out of sync represents what’s happening internally for many CPG organizations: they lack data harmonization and can’t enjoy the efficiency provided by operating on a single version of the truth.
Similar to different versions of a song being played or sung, CPGs often operate without having a common view of data that everyone shares. Instead, in an undisciplined fashion, teams are acting on a version they believe to be most accurate or valuable. And as those teams perform, they realize the truth as they understood it is not quite adding up to the anticipated results.
Without data harmonization, the tempo of change dampens
For optimized CPG forecasts and promotions, a data-driven approach is key. But despite having all the data possible at their fingertips – market data, retailer-specific point-of-sale data, loyalty data, shopper research data, etc. – CPGs still lack holistic insights. It is not unusual for organizations to have consultants developing pricing coefficients and elasticities in marketing while sales teams are utilizing a promotion optimization tool that applies different factors. Demand planning leaders may also have their own analysts, systems, coefficients, baselines and lifts. As companies take in greater amounts of data off of which to make decisions, it is absolutely critical to prioritize data harmonization and management – someone needs to be made the data maestro. Because of the rapid pace of the industry, CPGs can’t afford to be slowed by data disconnects.
Starting off on the wrong note
Soprano, alto, tenor and bass. Woodwinds, brass and strings. Just as a symphony is comprised of these roles, CPG organizations have functional teams to conduct. Marketing and sales often operate with different data sources than supply chain teams, and business units each have their own analytics tools. This siloed approach makes it extremely difficult to cleanse data and harmonize across the enterprise, which is important for finding patterns and executing on recommended next steps. Not to mention the duplicative efforts and cost associated with a siloed approach – when duplicative work is exerted across the organization, it hinders the “single version of truth” that companies desire. However unintentional, these data silos are contributing significantly to inefficiencies and slowed revenue growth that CPGs are experiencing.
A single version of truth needed for true revenue growth
CPGs today are starting to embrace revenue growth management as a strategic priority, which transforms episodic, once-a-year planning into a process that is ongoing and dynamic. But for the method to really have an impact – more accurate forecasts, benefits to the supply chain, better performing trade promotions – data harmonization is critical. CPGs need “common denominator data” to operate from. Once they have it, afforded to them by emerging technologies such as AI and machine learning, they can anticipate a harmonious performance across the enterprise.
To better understand the new strategies for revenue growth management, including the importance of having a single version of truth, download a copy of our latest CPG white paper, “Harnessing AI to Change the Game.”