How to Boost Your Profits, Save the Planet, and Learn to Love AI
Forget “waste not, want not.”
For retailers and CPG firms, the mantra of the future is “waste not, survive.”
Increasingly, investors are examining climate change and the risks and opportunities it creates for businesses. For example, according to PWC, reducing scope 1 & 2 emissions ranks as a high priority for investors. The current investing climate is putting more pressure on all firms to operate in a more sustainable fashion.
And the impacts on CPG firms and retailers are enormous.
Let’s take a look at managing waste, for example.
Each year, 30 percent of food in American grocery stores is thrown away. U.S. retailers generate 16 billion pounds of food waste annually. That waste hurts retailers in many ways, chief among them financially: wasted food from retailers is valued at about twice the amount of profit from food sales. And waste, of course, hurts retailers’ efforts to be sustainable – which, in turn, puts their reputations at risk with investors (and consumers).
No wonder retailers and their CPG partners are trying to figure out how to tackle food waste by being more sustainable. Sustainability can help retailers improve profitability by being more efficient. By embracing sustainability all along the supply chain, retailers can reduce waste. This starts with demand planning. More efficient demand planning means fewer instances of over-purchasing products, especially products with a short shelf life like products that contain raw materials or products that take up a lot of space on shelves. Overall, minimizing overstock regardless of the product is better to reduce investment losses and overstock, leading to waste.
But there’s one thing wrong with this picture.
Too many retailers are focused on improving processes. They’re losing sight of the big picture: understanding consumer behavior. Waste happens when there is a disconnect between what a retailer predicts consumers will do and what they actually do -- specifically, what they’re buying and how often they are buying. And these are not easy things to understand, as we discussed in our recent blog post about anticipating demand for hot dogs on Memorial Day weekend. The crazy fluctuations in consumer demand that has occurred during the COVID-19 pandemic underscores just how big this disconnect can be.
Fixing this disconnect can improve the way a retailer operates. Fixing the disconnect can even unlock innovation. For example, Kroger recently rolled out a new tool, the 84.51° Collaborative Cloud, to help companies such as Conagra align production with demand across Kroger stores. This leads to improvements such as more efficient forecasting.
Kroger’s platform is a start. For now, it’s not the kind of AI-fueled solution that solves demand-forecasting challenges long term. For that to happen, suppliers would need to have the ability to ingest Kroger-provided data in their systems, add on other data sources, and derive real-time insights with the level of granularity that is possible with AI.
In addition, Kroger’s solution relies on first-party data. To overcome forecasting and investing challenges, businesses are also turning to platforms that manage AI, first-party data, and third-party data cost-effectively. We believe that businesses can manage demand forecasting even more efficiently by combining first-party data with:
- Third-party data such as consumer search data gives brands real-time signals into shopper intent.
- Artificial intelligence offers scale. AI can assimilate vast amounts of data, including third-party and first-party, to find those emerging consumer purchasing behaviors.
This is where the right resource can help reduce waste. That’s why we created Meerkat.
Meerkat is an all-in-one demand, pricing, and promotions planning platform from Centific that gives users the ability to deliver the right product, at the right moment, at the right price while simultaneously delivering financial value for your stakeholders.
Meerkat leverages state-of-the-art, pre-trained AI models that are fueled by your own company data, alongside a broad range from our extensive data partner ecosystem, to solve challenges such as forecasting and demand planning, pricing, and promotion planning.
Our solution allows organizations to jumpstart better decision-making by seamlessly integrating with existing enterprise platforms. Not only does this allow you to leverage and maximize ROI on past investments, but you are also able to scale rapidly, regardless of your organization's readiness level.
Want to reduce waste and innovate? Contact us.