The future of data collaboration between retailers and CPGs

How retailers collaborate with their consumer goods partners is an ever-evolving process.

And it's one that has the opportunity for powerful transformation in the age of generative AI and predictive analytics. Consider this: What if retailers could provide CPG partners with data that highlights each item’s journey from the retailer’s distribution center to the shelf all the way to the register? 

At the same time, what if retailers shared total visibility of products from the point of manufacture all the way through the supply chain? Then, both parties collaborate with that data as a single source of truth between them. 

And they both benefit from generative AI that works to recommend new ways to optimize assortments, accurately forecast demand, manage inventory, develop profitable promotions, and execute all these activities across hundreds or thousands of stores.

This level of collaboration is possible today and continues to proliferate in the market. With supply chain systems that leverage predictive insights and generative AI, retailers and CPGs can collaborate using the same insights, data, and language. Product inventory, sales data, and supply chain insights can swim in both directions — all in view for the partnering CPGs and retailers. In modern retail, this will become the new standard of data collaboration.

How data collaboration is evolving

When it comes to sharing data and insights, brands and retailers have always danced around what to give and what to take. Culturally, this dynamic will always be at play. But a platform powered by generative AI and predictive analytics can keep both parties in rhythm — providing a single location for both parties to share data safely. The platform can also generate unbiased recommendations and shared results. 

Brands and retailers have traditionally functioned with limited visibility. CPGs, for example, may only track their product inventory from their warehouses to the retailer’s distribution center. After that, it’s a black box. 

Similarly, while some retailers share select insights into their shopper data with their CPG suppliers, that data is typically limited or outdated. However, a shared platform with real-time operational data flowing in from all points in the supply chain up to the point of sale can support a single source of truth. The shared approach can remediate supply issues before they arise and ensure maximum product sell-through. 

The combined results help to directly reduce product waste at the store and optimize on-shelf availability for both retailers and CPGs. It’s a collaboration that can generate significant, incremental sales and margin gains for both parties.

Where collaboration improves the supply chain and store experience

The ultimate vision of AI-powered data collaboration is to have retailers and their trading partners contributing data to the platform, which then creates end-to-end visibility across the supply chain from the point of sale all the way up through the CPG's distribution network. 

It can be a powerful way for both brands and retailers to optimize the supply chain, manage inventory, and influence category strategies. Examples of collaborative use cases include:

• Optimized on-shelf availability. Retailers and brands can see what products are on shelves at what stores and also leverage predictive and generative AI to forecast demand, including accurately predicting the impact of promotions on demand.
• Promotion planning and execution. Shared insights can drive effective in-store execution of planned promotions, ensuring maximum value and achievement of the retailer’s and CPG’s business targets.
• Vendor performance scorecards. With full transparency between both parties, retailers can more effectively ensure order, delivery, and quality compliance, and set accurate performance goals, working directly with suppliers in a shared space.

Perfecting the accuracy of product inventories, tracking on-time-in-full metrics, and introducing new product items with accurate demand forecasting are all areas that can also be improved through new AI-powered, shared data collaboration.

Better collaboration to come through AI

As more brands and retailers adopt predictive and generative AI, collaboration will become stronger and more powerful. Driven by AI, retailers and CPGs will identify new ways to reduce waste, successfully launch new items, execute planned promotions, keep items in stock, and create a more personalized retail experience. Shoppers will be the true winners, with retailers and CPGs working from the same insights.

The future of data collaboration, leveraging advancements in AI, will have a dramatic impact on how retailers and CPGs work together to grow both their businesses and keep shoppers loyal.