[Video] CPG brands' AI ambition might be weighed down by 'digital debt'

By Ryan Daily

- Last updated on GMT

Related tags AI Technology Data

CPG brands increasingly rely on AI technologies to crunch large data stores and find insight to win in the market, but many are falling short of their digital transformation goals due to outdated technology, Capri Brixey, EVP, strategy consulting at Insite AI, told FoodNavigator-USA in a video interview.

"We are breaching the threshold of digital debt that we can manage," Brixey said. "There are enormous challenges to making those investments, which frankly, are not small, but we're breaching a threshold where those investments must be made in order to keep up, and it will be a self-perpetuating cycle if those investments are not made. However, I would also argue that they don't have to be done in one fell swoop. We should always be thinking about AI as building it to break it later." 

“Paralysis by analysis:” Is too much data bogging down brands? 

Securing shelf space is harder as CPG brands and retailers face volatility from COVID-related supply-chain issues and increased competition from new market entrants, according to Brixey. At the same time, brands are being bombarded with data that is complicating strategic business decision-making, or what Brixey calls “paralysis by analysis.”  

“Part of the issue is that the CPG industry traditionally has been incredibly stable. There haven't been a lot of changes, so how CPG organizations go to business has not changed in a significant way over the past two or three decades, except that they are now more inundated with data than they ever have been before.” 

She added, “CPG organizations and the industry as a whole is really at an inflection point with what do we do with all the data? How can we effectively make decisions, especially in light of all that volatility with all of this data?"

CPG brands can better use and analyze their data with the help of AI technologies, which Brixey explained has three primary use cases in the CPG world: helping with administrative tasks, assisting in decision-making, and improving spend efficiency. 

AI can "make you more efficient, but not [take] away from something that you are creatively doing," reducing the need to do administrative tasks, Brixey said. Brands can also leverage AI to better understand what investments produce the largest return on investment (ROI), and more efficiently allocate resources — whether it be capital or human resources, she added. 

“AI focuses and helps us decide what we should do next. If I'm in a volatile CPG environment, I need to know how to close a gap, or I need to know what should I put on the shelf,” Brixey said. “[AI is] not going to take away the value of human decision-making. It's simply going to enable us to bring strategic thought leadership back to the table, which is slowly being eaten away ... within our jobs because we are trying to find the right data to extract.” 

"You just have to start somewhere"

Though AI can make actionable insight readily available, brands are facing different obstacles when it comes to implementing AI in their organization. Smaller brands might not have the capital needed to make IT investments, and larger older CPG brands might be burdened with siloed and outdated technology, Brixey said. 

CPG brands with legacy technology (i.e., digital debt) will need to make large investments in their digital transformation strategies — frequently moving from on-premises IT infrastructure to cloud-based ones — to fully utilize the power of AI. While these changes can be expensive, CPG brands don't have to make all the changes at once and can roll them out at a pace that makes sense for them, Brixey noted. 

However, CPG brands that implement new systems need to ensure that the technology can evolve with the company overtime and be configured to meet their needs in the current moment, Brixey explained.

“If you eliminate that legacy system, start someplace small, run in parallel. It does not have to be an all-or-none proposition. You just have to start somewhere,” Brixey said. “It's less about implementing a giant system that you are making a massive investment into. It is more about that strategic thought leadership — know where you want to go and then start somewhere.”

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