What can Data Visualization do to the CPG Industry?

Editor’s note: Understand the importance of analytics and visualization to leverage the CPG Value chain and 5Ps with the right dashboards. 

According to a study by McKinsey, CPG companies that use data analytics effectively can improve their operating margin by 60%. Given that Consumer Product Goods or the CPG industry has always had the need to (the 5P’s – Product, Price, Place, Promotion, People)

• Deliver the Right product
• At the Right time
• In the Right quantity
• At the Right place
• With the Right price
• By the Right People

Making all the “right” choices to see improvements in processes is not a chance but a series of planned activities that make the entire complex web of activities seamless.

But why are we talking about the process when the title clearly states Visualization? It’s simple, you can only visualize what exists and to have perfect dashboards you’ll have to focus on the data journey first and then the dashboard destination. So today let’s go on a data analytics journey on the entire value chain of the CPG industry with visualizations.

Destination: Switzerland (not really)! In case you were, what would you check first? The destination pictures and how would it look and then you would think of the journey and the hotels right? Let’s do the same today! First, let’s take a look at the different kinds of visualizations and dashboards you can expect with the CPG data, and then let’s talk about the processes.

CPG Visualization or CPG analytics revolves around transforming the CPG data being collected at multiple touch points right from the manufacturer to the POS data and transforming them into insights. Based on the data collected & how it is being leveraged dashboards can be divided into three types:

Operational Dashboards: These dashboards are for improving visibility into the operations on a day-to-day basis, therefore useful for the short term. These dashboards are mostly used at the managerial level to analyze operations.

Analytical Dashboards: As the name suggests these dashboards are used to present the analysis of the data captured. These are generally used by executive-level employees and data analysts.

Strategic Dashboards: Strategic dashboards cover the high-level KPIs and updates of the data and are useful for decision-making and goal-setting in the long term. These are normally for C-suite executives.

Even though these are broad terms and their uses, there is no hard and fast rule as to who should use what, it ultimately depends on the industry, organization, and the levels of hierarchy. You can also add other kinds of dashboards like a tactical dashboard, which is useful to track performance.

Here’s an infographic summarizing what the dashboards stand for and how you can leverage them for your organization.

Now that we’ve understood the multiple kinds of dashboards and the kind of personas that use them. But it is to be noted that one of the important and basic components of a dashboard is the KPIs. It is key to understand what to have and what not to do on the dashboards. Before we go into it here’s a destination picture then (no not of Switzerland):

At first glance, you can clearly understand what the presenter or the team wants to show, it’s the financials of the net accounts receivable vs accounts payable. For CPG, industries such as financials when checked at the right time can give insights about dealers, wholesalers, or any geographies, etc., whatever is the priority of the organization.

A study by the Food Marketing Institute found that more than 60% of CPG companies are investing in advanced analytics to improve their sales and marketing efforts. For those unfamiliar with it, Visualization is the end layer of Analytics, therefore only with effective analytics we can have good dashboards, this is what we mean by the Data journey!

The first step of the data journey starts with data management i.e., effectively managing, storing, and transforming the data from multiple sources (commonly known as ETL or ELT transformation). Then comes analyzing, and then comes visualizing the data. This is the short version.

The long version would fall back to be very specific to the organization's goals and existing technologies, in general, it would involve leveraging APIs and other data extraction tools to extract the data, clean it, and store the data in data warehouses and data lakes as per the analytics needs, and then use SQL, R, Azure ML, Python, or other tools to create insights from the data and then finally present it in Power BI, Qlik, Tableau, or other dashboards for decision making.

Simply stated, it would look something like this:

Depending on multiple factors like current data architecture and adoption, how multiple functions & business units visualize data, and the level of analytics that you might need, the current and the desired levels of analytics are analyzed. It would normally fall somewhere between the descriptive-diagnostic-predictive-prescriptive type of analytics. Though you must have known about it previously, let’s talk about them a little.

1. Descriptive Analytics: what happened?

2. Diagnostic Analytics: why it has happened?

3. Predictive Analytics: what is likely to happen in the future?

4. Prescriptive Analytics: what is the best course of action?

Unlike what most people think, visualization is not limited to descriptive or diagnostic analytics but can be extended to predictive and prescriptive analytics too. You can integrate data even from R and Python or Azure ML to visualization software like Power BI and Qlik.

Now that we’ve established what the data journey for CPG comprises, let’s look at the bookings to understand: Where and when you can start your journey?

Though this a very complicated question to answer today we will be talking only about the process and the making behind the Visualizations, if you’re interested to know in detail about the visual aspect of it, you can refer to our Power BI dashboards design guide.

The first step in your visualization journey starts with KPIs. Though it might seem basic, you have to understand as we’ve mentioned above there are multiple types of dashboards and by dividing them further into business functions you can have multiple permutations and combinations.

A few KPIs that CPG industry dashboards can have at an operational and analytical level are:

- Product Sales by stores

- Stock Levels for each store

- Product Margins

- Shelf availability

- Delivery time

- Fulfilment statistics

- Customer retention rate

- Preference data (brand vs self)

- Inventory in hand

Some of the KPIs for strategic and financial teams are:

- Sales revenue vs forecast

- Profit per customer

- Product sales by geographies

- Sales order changes (by quarter or month)

- Delivery costs

- Logistics costs to revenue

- Overstock, understock, and deadstock calculations

These are just a few of the KPIs that are useful for the FMCG or the CPG industry. But the actual KPIs they want to show should be the ones executives already have in their mind or are something they would like to see as per their strategic needs. In case you are not sure about where to start, then one of the best processes would be to identify Acceptable, Advisable, and Admirable KPIs suitable for your CPG business. If you are unsure about the same, drop us a message and our CPG Analytics experts can help you with the same.

Now that you’ve decided on the content or the type of content you want to show, next comes the structure and the placement of the KPIs. Normally, users follow a “Z” pattern in reading therefore the most important KPIs should be placed first and the not-so-important ones at the bottom, like the one in the dashboard below:

Also, it is important to know which type of chart to use when needed. The usage of Pie charts, bar charts, stacked charts, combination charts, waterfall charts, etc. can create confusion when the user is unaware of how to read the charts. Therefore, it is important to maintain charts as simple as possible but also to convey as much information as possible. Here’s a cheat sheet in case you were looking for one.

Source: Power BI best practices

Here are a few tips for visualizing CPG data (in addition to the data and KPIs that have to be represented) :

• Use clear and simple charts: Opt for clear and simple charts such as bar charts and line charts, or something that your end user is comfortable with.

• Show data trends over time: Use charts to show how CPG data has changed over time to identify trends and patterns in the historic data.

• Use color effectively: Use a consistent color scheme to highlight important data points or trends.

• Use filters and drill-downs: Allow users to filter and drill down into the data to see more granular details.

• Use interactive visualizations: Use tools like hover-over text, zooming, and panning to make the data more accessible. ( Varies with the business intelligence tool you are trying to use)

A study by Nielsen found that CPG companies that use data analytics have a 5-6% increase in sales productivity. In another study by the Grocery Manufacturers Association, CPG companies that use big data and analytics have a 3-5% increase in marketing ROI. As such taking even a few steps to reach that “admirable” stage in the analytics journey is important by taking the steps toward acceptable frameworks first. One such step is visualization.

And though the hype around visualizations is increasing over the past years, visualizations are not necessarily new to humankind. Visual imagery has always been an effective way to communicate both abstract and concrete ideas right from Greek geometry to Leonardo Da Vinci’s paintings they have been useful for both technical and scientific purposes.

Though we are not exactly asking you to draw the visuals, visualization analytics has become much easier for both the end user and the analysts. Let’s get into the analytics perspective, and how it helps end users better:

- Top-line reports can be presented in a compelling format to help executives narrow down on actionable items quickly.

- Automation in the entire visualization process reduces time consumed from hours to seconds.

- Weekly charts which require updated data but the same KPIs can be automated.

- Huge amounts of data right from competitor data to internal data can be compared side by side and can be drilled down with ease.

- Send trigger mails with weekly, monthly, or scheduled time data for quick insights.

- Data review for categorical information can be done w.r.t. geographies, product, period, market, salesmen, markets, etc., all under the same dashboard.

And these are the use cases of CPG Visualization that just scratch the surface of the iceberg. A lot more can be done only with access to the right data, for example, advanced analytics. A study by Boston Consulting Group found that CPG companies that use advanced analytics have sales growth that is 2-3 times higher than those that do not. We will not deep dive into advanced analytics today but if you’re interested to know you we have written in detail about predictive analytics use cases.

Here are a few examples of CPG Analytics dashboards with their POV.

POV: Operational Dashboard: Overall Equipment Efficiency for Equipment at a weekly data level. You can find the outliers of the machine productivity and overall performance in just one glance.

Now that we’ve seen an operational dashboard that can be useful at a manufacturing plant level, let’s go one step above and look at a distribution summary. You can check the sales level by year, geography, salesmen, distributor, channels, and more.

An executive dashboard like below has an entirely different purpose than the ones mentioned above. These dashboards can be used for strategic purposes for decision making, like understanding the decreasing profit margins and sales at a holistic level rather than at a distribution level.

Though sometimes companies believe that only a few functions would benefit from analytics and a few wouldn’t – this isn’t actually true. Most functions in the CPG business can be benefitted by analytics. A study by IBM found that CPG companies that use predictive analytics can achieve a 9% reduction in supply chain costs, and another study by Capgemini found that CPG companies that use advanced analytics can achieve a 4-5% reduction in the cost of goods sold. And there are a lot of other studies that would benefit the entire organization.

So, let’s break down the process further back and take it to the basics and how analytics and visualization can help the overall business. The 4Ps of business is often taken as the most important and basic entities. Namely: Product, Price, Place, and Promotion. Let’s study them in brief and how analytics can shed more light on them.

Product: The entire manufacturing, supply chain, logistics, and reverse logistics are based on this one “P”. With effective visualizations, you can bring visibility into the inventory, check order processing, delivery status, the efficiency of logistics and warehousing, and more. By effectively drilling down into the actionable area, you can then use demand forecasting or scenario management to find out solutions.

Price: Cost of sales, profit margins, and competitor data can be visualized side-by-side to understand if there is any scope or need to increase or decrease the price. You can map merchandising data in real time with consumer information with fluctuations in demand for e-commerce to identify the best dynamic pricing models.

Place: For example, by visualizing heat maps of e-commerce or physical movement, you can find the most “happening” paths to improve the UI/UX or floor planning. Understanding the channels where sales are happening with trends data can help companies understand if they need a warehouse for their eCommerce or more physical stores for their customers.

Promotion: 360-degree marketing has not only become a trend but a need with the increasing digital touch points. As such retailers and eCommerce companies can have customized promotions and view the results of such promotions to find the most optimal solutions.

The hidden “P”: People

Why we are calling it hidden is- All the above-mentioned 4Ps also talk about the consumers. But if the consumer data is to be taken separately you can find the demographics and the shopping behaviors of the customers to be able to offer them more relatable and necessary products.

If you’ve made it till here, Brava(o)!! Just a few final checklists we want to send you away with.

Ensure your data is relevant and timely: With CPG historic data is important, it is more important to go with the current trends and see the changing landscape.

Analyze only relevant data: With many data sets and data sources evolving over time, you can be flooded with information – deal with the information you need!

Keep with the trends: Keep checking data with new CPG channels and sources. Old is gold, but new can be diamonds.

Track your retailer data: Deal with partners that are essential and useful for you, by maintaining scoreboards with refreshable data you can keep easy track of retailer health.

All of these are in addition to the KPIs that we spoke about sales performance, industry benchmarks, SKUs, and product lines. If you’re thinking about why this is important. Let’s put it into perspective: According to NielsenIQ, every year 30,000 new products are launched every year in the CPG market of the United States and 95% fail. In India, the CPG market is growing at 27.9% till 2025, therefore staying competitive is the only way companies can keep up with the growing market.

Last but not the least, with the omnichannel approach, data security is a rising concern. According to a survey by McKinsey, 40% of respondents stopped buying from a company when it violated their digital trust. So, ensure that your data is well-protected and secure.

Right from the Greek era to now Visualizations have been a tool to simplify understanding, and this is the same for CPG companies too. From reducing the report TAT to presenting data beautifully and concisely, Business Intelligence can have a profound effect on companies.

If you’re interested in Business Intelligence or Data Analytics for CPG Industry, drop us a message and our CPG Industry experts can help you with the same!!