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Strategy

Jun 18, 2024

Amplify performance across CPG processes with process mining

Sanjana Yarram

Amplify performance across CPG processes with process mining

Evolving customer preferences and behavior are transforming the Consumer Packed Goods (CPG) industry. For instance, 66% of customers expect companies to understand their unique needs and expectations. Consumers are also using more diverse channels to make purchases, which has resulted in CPG firms embracing new channels such as online stores and buy-online-pickup-in-store (BOPIS). Additionally, various business and socio-political conditions, such as inflation, supply chain shortages, geo-political tensions, etc., and unforeseeable events such as COVID-19 add to the complexity of the sector’s business processes.CPG enterprises must reconfigure their business processes to remain customer-centric and adapt to the evolving business environment. Process mining can play a critical role here.

Process mining is a data-driven approach that enables a company to visualize its business processes. It evaluates event logs and data from multiple processes to provide insights into process performance, identify bottlenecks and inefficiencies, and improve workflows. Here are some CPG workflows where process mining and the infusion of AI can be leveraged to achieve successful business outcomes.

Procurement

Process mining can provide valuable insights into procurement. By examining event logs, CPG firms can detect bottlenecks in sub-processes such as purchase approval, supplier selection, etc. Process mining can help firms deep dive into the procurement process to identify cost-saving opportunities, such as negotiating better prices and automation opportunities to enhance process efficiency.

Logistics

Logistics plays a significant role in the CPG sector’s business as raw materials, semi-finished goods, and end products have to be transported efficiently across manufacturing facilities, warehouses, retailers and to end-users. Businesses can review event logs and visualize the distribution process using process mining. They can leverage it to pinpoint storage issues and delivery delays and assess the overall efficiency of distribution networks. Using AI-powered process mining, CPG firms can automate tasks and improve transportation routes, thus lowering transportation costs, optimizing warehouse operations, and improving order fulfillment accuracy.

Order-to-cash process

The order-to-cash process begins the moment a customer places an order. It involves order fulfillment, invoicing, payment collection, and reconciliation. However, the customer experience can get disrupted due to stock-outs, multiple credit checks, or delays and errors due to manual tasks. Process mining and process AI can help CPG firms visualize process execution in real time. It can help them identify inefficiencies and redesign processes so that they can make incremental improvements and enhance productivity. They can also use automation to streamline processes. For example, order cancellation can be managed better with improved predictions and steps to quickly auto-recommend suitable alternatives.Automated inventory management can enable complete visibility of their stock levels and reduce error-prone, laborious tasks. CPG firms can thus transform the buying experience with a seamless order-to-cash process that can quickly adapt to evolving customer demands and deliver personalized experiences.

Research and development

Process mining can streamline workflows in research and development. For example, it can identify areas of overlap to prevent redundant work and enable teams working on the same ideas or similar projects to collaborate better.Compliance with laws and industry standards is critical in the CPG sector. Regulations differ across geographies and also change over time. Companies can use process mining to track process adherence, spot variations, conduct audit trails, etc. They can identify non-compliance and take corrective measures, reducing the risk of penalties and legal action.

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