contact us
POV

Four Ways Retail and CPG Can Leverage RPA

by Mario Vollbracht

Enterprises are increasingly recognizing that the benefits of Robotic Process Automation (RPA) extend far beyond basic cost reduction and increased productivity.  By executing routine administrative tasks faster and more accurately and consistently than humans, smart tools are being applied to a wide range of generic back office processes. In addition, by enabling improved auditability and better data analytics, RPA is capturing the attention of executives seeking to address a variety of critical industry-specific challenges.

The ongoing convergence of the retail and consumer products industries creates some particularly compelling opportunities to leverage RPA.  Specifically, while investments in logistics, data analytics and supply chain management systems have yielded sophisticated capabilities, significant process steps remain that require continued reliance on cumbersome systems and manual effort.

Let’s look at four areas where RPA can make a difference.

Trade Promotions: For a consumer products firm, trade promotion – that is, the collection of strategies and tactics used by a company to increase demand for products at the retail level – is the second biggest expense after cost of goods sold for a typical brand company, and ranges for most between 16 percent and 19 percent of annual revenue. Effective trade promotion management is a delicate balancing act that requires ongoing, real-time calculations of multiple variables.  If a detergent manufacturer offers a 10 cent rebate on every case of product a retailer buys, that retailer can be expected to buy more soap. And while the soap maker can forecast how much more the retailer will buy, the ability to quickly and accurately track and analyze how well the promotion is actually doing is imperative, and requires multiple systems to talk to each other. There’s also the challenge of defining the sweet spot of a discount – what’s enough to entice the retailer, but not too much to cut into margins?

Despite significant investment in sophisticated technology, many firms still rely on spreadsheets and manual effort for much of the data collection and analysis involved in addressing these questions. Many of these manual efforts can effectively and efficiently be automated by leveraging RPA.

Sales Analytics: Given the amount of data to analyze and the multiple variables to consider, Monday mornings are frantic affairs at consumer product firms, as account teams scramble to compile weekend sales data from disparate sources. In this instance, RPA tools can be applied to collect sales data over the weekend, consolidate that data over the course of Sunday night and have detailed reports waiting for the account teams when they arrive on Monday morning.

In addition to providing real-time insight and enhancing the nimbleness of inventory and demand management, the accuracy and auditability of RPA systems can help a firm conduct more effective post-mortem analytics to better understand why sales of a particular product are faring well or poorly.

Store-Specific Planning: Retailers have for years worked to tailor their storefronts and displays to the demographic composition of the store’s location. The goal is to immediately steer the customer to what he or she is expecting.  Spanish-language packaging features prominently in stores in Hispanic neighborhoods, for example, while snacks and energy drinks are front-and-center for stores in college towns.  Traditionally, the ability to segment store layouts has been limited to a “clustering” approach based on a few high-level criteria, while the detailed sales data needed to inform more granular analysis has been largely inaccessible.  With RPA tools that tap into existing databases and drag lines of code from one system to another, retailers can develop detailed and fact-based analyses of merchandise preferences on a store-by-store basis. The RPA system could even collaborate with handhelds at the store in order to capture execution and report compliance.

New Product Introductions: New item introductions and line extensions are the lifeblood of any brand company. The roll-out of a new product involves significant investment and requires close collaboration and multiple hand-offs between R&D, manufacturing and marketing.  Product roll-outs are conducted with military precision over a tightly defined scope, with careful consideration given to geographic and demographic variables. Here again, immediate feedback is key: How’s the product doing? How does actual performance compare to forecast? How should we adjust to the data we’re seeing?  RPA tools can significantly enhance decision making by automating processes around alerts and thresholds, allowing firms to adjust pricing, inventory and production.

About the author

Mario Vollbracht specializes in retail and CPG; his areas of expertise include production planning, business analysis, category management and supply chain rationalization.