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Fast Moving Consumer Goods (FMCG) products dominate our life every day. FMCG is the fourth largest sector in India, employing more than three million people. The major players in the FMCG sector are ITC, Hindustan Unilever, Amul, Coco-Cola and the like, half of them being in the household and personal care space.
The competition is high in the FMCG sector. Every company tries to out-do the other in terms of production, supply chain, sales, marketing and retail strategies– all in an effort to attract the consumers towards their side of the store shelf. The profit earned from such products is very low and therefore, to have a sustainable business, the aim of any FMG company is to supply high volumes that cater to a huge consumer base, thereby earning a high turnover, albeit low margins.
The FMCG companies face several challenges in decision making at every stage of the product journey despite generating several data points. Each FMCG company produces an enormous amount of data consisting of POS data, customer demographic data, market research data, promotional campaign data, finance data, social media data, weather data and the list goes on. But these are unstructured, scattered and available in different formats. This is where data science and analytics help in churning out this data into actionable insights.
With the help of advanced machine learning algorithms, the FMCG company can merge all the data and bring structure to it, and therefore find better answers to various problems that plague their business.
Benefits of big data in FMCG
Supply chain analytics: With the help of Supply Chain Analytics, a supply chain manager can set up and maintain the most cost-effective supply chain mechanism that would result in OTIF (On Time In Full) deliveries.
Sales forecast: A sales manager can forecast his/her sales more accurately with the help of Time Series concepts and recommend effective improvements in operations.
In advertising: FMCG companies invest a large proportion of their funds in advertising. With the help of machine learning and predictive analytics, the brand manager of an FMCG company can efficiently utilize his marketing spend in the right mix of advertising and promotional channels, that would result in a high return on investment.
For monetary analysis: A retailer can choose the right shelf space expenditure with the help of statistical concepts like ANOVA. With the help of store clustering, an FMCG company can strategize their efforts on a regional basis to capture customers and deal with regulatory compliances. With the help of RFM (Recent Frequent Monetary) analysis and category scorecard analysis, the FMCG company can adopt a consistent sales strategy to acquire and retain loyal customers, who consistently buy their products instead of a one-time purchase.
To understand customer behaviour: With the advent of social media, text mining can help FMCG companies understand the taste & purchase behaviour of consumers and thus create better and timely marketing campaigns.
Market/business analysis: Tracking the market trends and tuning the business accordingly a data analyst can help his/her organisation stay relevant in the FMCG industry without hitting any challenges. This also helps the companies to pre-empt their internal and external business strategies such as developing new products, advertising, cost-effectiveness etc.
With so many hard-to-predict factors affecting the extremely competitive FMCG industry, Data Science is undoubtedly the way to do business in future. The companies are fastly adopting data science/analytics in their business in order to achieve sustainable growth.
Sourcing data science talents
However, the scarcity of skilled talents in data science or data analyst remains the biggest challenge for FMCG companies. As the demand for niche skills are very high from all the industries, it is difficult for FMCG companies to find suitable talents. Hence, the industry needs to upskill or reskill their fresh and existing workforce in data science and other cutting-edge technologies to fill the emerging positions in the companies.
Manipal ProLearn offers executive programs in data science and data analysis for working professionals and freshers. The FMCG companies can collaborate with us to train their staff and prepare them to be future-ready.