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Insight to plan: A new industry capability
10-MINUTE READ
October 14, 2024
Consumer goods companies are facing unprecedented challenges: increasing complexity, volatility and uncertainty, coupled with a scarcity of resources. The traditional annual planning cycle, once the bedrock of corporate strategy, is now inadequate. As the world continues to change at lightning speed, with consumer preferences shifting rapidly and supply chains facing constant disruption, strategies must become far more flexible and adaptive. Resilience and agility are no longer just buzzwords—they're essential for survival. This new reality demands a fundamental shift from periodic planning to dynamic, continuous decision-making and resource allocation.
Despite this pressing need for change, many consumer goods companies are stuck with a strategic planning process that is fragmented and inflexible. Marketing, sales, supply chain and finance often operate in silos, leading to conflicting plans and suboptimal resource allocation. Leaders find themselves drowning in a sea of data, spending countless hours—up to 800, according to our experience with clients—preparing for meetings rather than making decisions. Despite having access to more information than ever before, many executives still default to intuition-based decision-making, unable to fully leverage the wealth of data at their fingertips. The result? Strategies that are outdated almost as soon as they're formulated, leaving companies constantly playing catch-up.
Enter the era of AI-driven strategic planning
Picture a strategy process that's not confined to yearly offsite meetings but is instead a living, breathing entity that evolves in real-time. Imagine AI algorithms that harness vast amounts of structured and unstructured data—from sales figures and supply chain metrics to social media sentiment and geopolitical trends—to identify patterns and opportunities that are impossible for humans to calculate. Envision AI tools that can simulate countless strategic scenarios, helping leaders anticipate and prepare for a range of possible futures. This is not science fiction. It's the new frontier of data-driven strategy, and it's already a reality for forward-thinking companies.
Generative AI is the game-changer
This technology has come to disrupt, but those who embrace it will thrive. Generative AI can process enormous amounts of data and generate insights and scenarios that are not based on existing data or assumptions, but on learning from complex patterns and relationships, and on exploring novel and creative possibilities; it can even explain all these in human terms. Its potential in corporate strategy and planning is significant, as it can help consumer goods companies with the generation and simulation of:
New product ideas, designs and features, based on consumer preferences, trends and feedback.
New marketing campaigns, content and channels, based on customer segments, behavior and response.
New supply chain networks, routes and partners, based on demand, cost and risk.
New manufacturing processes, layouts and technologies, based on efficiency, quality and sustainability.
A new industry capability that connects it all
Annual budgets and planning cycles, static market analysis, fixed assumptions and manual adjustments are not responsive to the changing market conditions and business performance anymore. Instead, leaders must create a new strategic capability to plan and actively steer the enterprise’s financial resources, workforce, commercial outcomes, supply chain flow and sustainability impact across the entire value chain in a dynamic and integrated way. We call this "Insight to plan", and it’s the first of four mega processes that we have defined as critical to reinvent the consumer goods value chain.
Insight to plan is an end-to-end value stream that focuses on translating strategy into actions that meet business ambitions, ensuring companies stay agile and responsive, and it’s a key enabler for CPGs to achieve competitive advantage, operational excellence and customer satisfaction. This capability interacts with and influences all individual planning and steering functions. It doesn’t replace them; it connects and orchestrates them in a smarter, faster and better way to adapt and thrive in a changing environment.
This mega process leverages advanced AI and predictive analytics to continuously gather and synthesize market signals, consumer trends and operational data. This way, the burden of insight generation and even decision-making increasingly shifts to AI. We call this “algorithmic leadership”, and it allows executives to detect emerging opportunities and threats far earlier than traditional methods, simulate complex market scenarios and their potential impacts across the entire value chain and dynamically adjust resource allocation and priorities based on changing conditions.
Advanced capabilities enabled
But Insight to plan is not just a matter of simple simulations and agile planning. It enables companies to develop new advanced capabilities:
A systematic and collaborative process of exploring and evaluating multiple possible future scenarios, based on internal and external drivers, and defining the best course of action for each scenario.
A holistic and coordinated process of aligning and synchronizing the strategic, tactical and operational plans across the value chain, ensuring consistency, transparency and accountability.
A data-driven and AI-enabled process of predicting and detecting deviations from the plan, based on historical patterns, current trends and future signals and triggering alerts and actions.
A dynamic and iterative process of optimizing and adjusting the plan, based on the latest data, insights and scenarios, and leveraging automation and decision support tools.
Introducing digital twin technology
The enterprise digital twin is the underlying capability that allows us to do all the above. It’s a comprehensive and accurate representation of the entire value chain, including all the relevant data, processes, resources and constraints, and it enables real-time visibility, simulation and optimization of the business performance. For example, a company can create a digital replica of their product portfolio, customer segments, distribution channels and manufacturing plants and use it to analyze and optimize their profitability, market share and service levels.
The path forward to AI-driven reinvention
We’ve seen some early success with constructs known as 'decision cockpits', which provide executives with centralized, real-time insights on a weekly or even daily basis. We have been working with companies who are overlaying massive data sets with generative AI to allow executives to interact with financial and operational data through intuitive, natural language chat interfaces. What’s next? Companies will be able to continuously identify the optimal next steps at every level of the organization. While this technology is extremely new in the consumer goods sector, we’ll be seeing pioneers very soon.
For consumer goods executives, embracing this new approach represents more than just an operational shift—it's a fundamental reinvention of how strategy is developed and executed. The old model of top-down, periodic strategic planning gives way to a more fluid, data-driven approach where strategy is continuously refined and executed in real-time. This new paradigm requires a different set of leadership skills and organizational capabilities. To successfully implement it, companies should consider the following steps:
Define the vision, objectives and roadmap for Insight to plan, aligning the stakeholders and securing sponsorship and governance.
Design and implement the Insight to plan processes, roles and governance, managing the change and adoption and measuring the value and impact.
Select and deploy the Insight to plan platform, tools and applications, integrating the data and systems and ensuring scalability and security.
Source and enrich the data, developing and applying the AI models and algorithms and ensuring the quality and reliability.
Assess and develop the Insight to plan skills and competencies, building the Insight to plan culture and mindset and fostering collaboration and innovation.
The future of consumer goods is here
The consumer goods industry stands at a pivotal moment. The convergence of AI, data, analytics and strategic planning is not just reshaping how companies operate—it's redefining the very nature of business leadership. Insight to plan represents a quantum leap forward, offering CPGs the agility and foresight needed to thrive in an increasingly complex and volatile market. The future of consumer goods is here, and it's more dynamic, responsive and intelligent than ever before.
To discover more on this topic and explore the mega processes enabling end-to-end value chain reinvention, I encourage you to read our full report: Reinventing the consumer goods value chain.
Contact Amar Subramanian to discuss how you and your organization can harness Insight to plan and the power of data and AI to reinvent your value chain.