Artificial Intelligence in the FMCG sector – is it worth investing in?

A natural consequence of the spread and development of Artificial Intelligence is its utilization in FMCG business processes as well. On the way to properly plan your actions in AI and why it is worth choosing a proven partner for cooperation – an interview with Marcin Grzegorczyk, AI Product Manager at Asseco Business Solutions.

and relevant way. This is usually based on very large data sets and in an objective manner, thanks to the elimination of many factors that have restricted us so far, such as constant lack of time, perturbations caused by subjective evaluation of a person, high costs, or lack of appropriate tools for analysis.

This is the greatest value of AI, regardless of the area of life or the industry in which it is utilized.

The knowledge obtained through Artificial Intelligence helps make better decisions, even difficult ones and under the pressure of time. AI improves their accuracy.

And when our decisions are better, their outcomes have a favourable effect on our life, health or work. Leaving the FMCG industry for a moment, I will illustrate an example. If we drive a car equipped with state-of-theart technological solutions, our safety and comfort of travel increase, the fuel consumption is lower and we are sure we will reach our destination without wandering around. However, we still have to drive the car on our own and make decisions all the time – when to overtake another car, where to take a turn, what speed to travel at. In this process, tech- nology brings us knowledge (through analysis of many factors at the same time) about what would be most favourable at a given moment. The same function is fulfilled by artificial intelligence in the planning and implementation of a sales strategy.

How exactly does it take place? What may AI specifically improve in sales?

A natural consequence of the spread and development of Artificial Intelligence is the utilization thereof in FMCG business processes as well. Each day, every organization generates a large amount of data – its own and those concerning its competitors, coming from different sources, sales channels or systems. On their basis, the senior management and sales managers, as well as representative bodies, may make more or less accurate decisions. It is up to their relevance that the company manages to achieve the sales targets, implement the best strategies, optimize the costs, etc. AI may increase the probability of success.

I will try to illustrate it again. Let us imagine two salesmen from two different (competing!) companies have to meet their targets for a given month at the points of sale assigned to them.

They offer similar products from the same category, use the SFA class solutions, have access to the distributors’ inventory data, optimize the route to the customer as far as possible, etc. Which one of them will win the race? Only one. The one “guided” to the stores by artificial intelligence. Why? Here is the explanation:

Sales target for a given month: 30% growth of sales in a specific category

The AI shows a list of visited stores, broken down by actual potential in the category of products offered by the salesman. Thanks to this, Representative 1 may direct their activities to customers with whom they would achieve the highest revenues and return on investment. This is important since their target is a 30% growth of sales in the given category.

The potential of retail customers is described using AI in accordance with the actual situation. To this end, AI uses data from many sources, updated on a regular basis (in view of frequent changes in the market).

Thanks to the above, Representative 1 obtains a list of stores in which a 30% growth of sales in the given category is most probable to achieve.

Reaching the point of sale entails high costs and consumes a lot of time. AI helps Representative 1 optimize their routes in such a way as to make both the time spent in the car and the mileage as short as possible.

Knowing the current potential of a given point, Representative 1 may also ensure the optimal utilization of store shelves, having the most valuable products placed on them (based on the demand and margin optimization).

If a risk of unavailability or a necessity to replace the commodity with another one occurs suddenly (during the month), Representative 1 will receive an alert and will be able to take corrective actions quickly.

Representative 1 has a higher target to achieve than in the previous period (working for the same amount of time), but their revenues and sales bonus are not threatened. With AI recommendations (proper selection of customers, products, sales promotion and tasks), they are able to fulfil the planned targets.

Sales target for a given month: 30% growth of sales in a specific category

The other field worker is not so lucky. In theory, they know the potential of the customers but, unfortunately, the data is outdated (the company only determines the potential once per year and some time has passed since the last analysis). Therefore, Representative 2 does not know which stores are their best customers for launching a specific trade activity, or where the probability of a 30% increase in revenues in a specific category is the highest. Therefore, they visit all retail points, devoting lots of time and energy, incurring high expenses and counting on a bit of luck.

Representative 2 works with a list of customers assigned to them and can only plan visits to all of them at an (intuitively) chosen frequency.

Representative 2 has no such possibilities – optimization mainly applies to routes and customers “nearby”. This entails lower productivity in reaching the customers.

In the second case, there is a hazard connected with the improper matching of the offer (products without potential).

Representative 2 is unable to pick up such situations, which entails a risk in a lack of sales.

Representative 2 works very intensely, spending a lot of time and money on visits to stores. However, they are unable to increase the revenues in the given category by the planned 30%. The level of their sales remains identical as in the previous settlement period. This is not bad but could be better. Ultimately, the goal is not achieved.

This sounds very interesting. Is it in a similar way that Asseco Business Solutions supports its customers, helping them meet their sales targets?

Currently, we have ready solutions and implement AI projects for the largest FMCG producers in Poland. As I have mentioned before, we focus on support for Route-to-Market processes, since, in our opinion, regular determination of the potential of stores, reaching the right points at the right time and with the right offer and promotion, as well as constant monitoring of their behaviour, is the optimal way to increase sales and to fulfil targets.

Such a position has also been presented by the Promotion Optimization Institute, an international organization well-known in the FCMG sector, in its latest report (POI Vendor Panorama), mentioning AI class tools as among the most important factors affecting the increase of sales efficiency. We are immensely proud that our Recommendation

System by Asseco has received the POI Bestin-Class award this year, finding itself in the top five (in its class) AI solutions for FMCG worldwide.

What would you advise producers?

When, how and to what extent should they begin their adventure with AI?

I believe the sooner the better. However, such a project must be well-considered, well-organized and supported. In planning AI actions, every FMCG organization needs to be aware that technology itself is not everything. Definitely, a key factor is the understanding of the business problems and processes that Artificial Intelligence is there to help improve. Then, it is necessary to assess their importance, analyse to which aspects they relate, and check whether they can be solved within the company, as well as to determine whether the given action makes sense. All that remains in the next step is to embed the AI properly in the selected process and to configure it properly for cooperation.

This seems to be simple, yet FMCG companies have their business goals i.e., production and sale of the produced goods. This is what they should focus on, rather than fighting with technology. Therefore, in the beginning, it is worth choosing a trusted and proven partner with experience in such projects to cooperate with.

What is worth paying attention to then?

Preferably, this should be a company offering comprehensive services in sales support solutions (not just strictly technological or only analytical). One who is able to understand your business, advise the most favourable actions involving AI and explain their potential effect on sales. One who is not afraid to say no, i.e. to advise against projects bringing no major benefits or unprofitable to the organization. One that would adapt the AI strategy and tools to the changing customer needs.

Thank you for the interview.