It takes an ecosystem: How CPG and retail companies can apply process mining to transform

Consumer Product Goods (CPG) companies and retailers are converging in many ways as they aim to transform their businesses and customer experiences by honing their processes.

Although CPG companies and retailers are different but interlinked enterprises, they tend to face similar challenges that go beyond navigating economic trends and consumer preferences.

We caught up with Celonis' Lindsey Peters, Rob Popovic and Gene Reznik to talk about the CPG and retail industries, process challenges and opportunities and the role of our partners. Here are the highlights of our conversation.

CPG and retail challenges rhyme. Peters, Retail and Consumer Goods Industry Lead, said in many ways retail and CPG are converging. "The challenges for both retail and CPG are similar," she said. "At the core of everything in retail and CPG is the customer. Everything they do is toto drive the overall consumer experience."

Peters noted that CPG companies are moving more direct-to-consumer (DTC), but now face different logistics, supply chain and returns processes and challenges. Meanwhile, retailers are creating more private brand labels and starting to look more like CPG companies in some areas.

Popovic, Vice President, US Consumer Sales, said another reality that binds retail and CPG together is that they have to manage data, make sense of it with context and make smart global decisions. "Being able to wrap your arms around your data at scale is becoming increasingly more difficult and processes start to break down," said Popovic.

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Retailers and CPG companies will have to reconfigure their businesses and processes to deliver good customer experiences. Reznik, Senior Vice President of Ecosystem and Industries, said "customers will ultimately sort out who wins and loses in CPG and retail."

"You're competing on customer experience that's set by a lot of third parties you don't control," explained Reznik. "The consumer is driving the experience they want and whoever can reconfigure their business to adapt and fulfill those demands will be in the best position to be successful. You're adapting your business processes."

Can retailers and CPG firms adapt fast enough? Peters said CPGs are like large ships that have to make a fast turn, but these companies have become nimbler due to the COVID-19 pandemic. "The pandemic has forced the CPG industry to transform their businesses," explained Peters. "Retailers have been slower to transform, but it's clear they need to invest in back-office operations and processes to be set up for success longer term."

Also: Retailers 'directionally optimistic' about challenges ahead | Celonis Retail and CPG industry forum: 6 lessons learned

The line between moving fast and moving smart. Reznik said there are new business models emerging daily to improve customer experience. Last mile delivery is one area, but ultimately CPG companies and retailers "are monitoring 25 or 30 different consumer trends with ChatGPT just being the last one." He added:

"Understanding how to play in emerging spaces, and how to target your limited investments is what's going to make some of these companies more successful than others."

"Seamless processes across customer channels with a consistent brand experience will also create winners," added Peters.

Where process connectivity and technology come together. "What we've seen recently is that the companies clearly winning, and adapting have put technology at the core of what they do," said Popovic. "Some retailers look like technology companies that have process innovation on top of their systems and connectivity across the business. There's a great opportunity to help these organizations reimagine the way they run their business."

"The capabilities of technology have never been as great as it is today," added Reznik. "The challenge is to have the technology and processes to deal with volatility such as inflation, supply chain shortages and disruptive events to be more precise about forecasting."

How partners aid CPG and retail companies. Reznik said partners fill a vital role for CPG and retail transformation across logistics, supply chain and direct-to-consumer experiences.

"Big organizations need to transform and they're going to work with companies where they have long standing relationships, trust and success despite complicated environments," said Reznik. "These long-time partners understand how to make change happen."

Reznik added that CPG companies and retailers have an ecosystem of partners including large systems integrators and specialized industry providers as well as technology companies such as Celonis to act as an accelerant.

According to Popovic, trust between partners and CPG and retailers is key. "Trust plays a massive role here. You're talking about years and years of technology implementations, application development, and people training between these companies and partners," he said. “I can think of a few examples that really illuminate the value of Celonis and our strategic partners coming together to drive results for customers.”

Here are a few examples:

• A worldwide sportswear brand turned to Celonis and a top global professional services firm, specializing in strategy, consulting, technology, and operations solutions to help them manage their excess inventory.

• A global retail giant is working with Celonis and a “Big Four” consulting firm to drive hundreds of millions of dollars of cost from their business through P&L savings, working capital optimization, and productivity gains.

• A leading North American travel center network is revolutionizing its client relationship management by integrating automation at its core. This transformation is made possible through a collaboration with Celonis and a renowned global professional services firm, which offers a wide range of expertise, including audit, tax, consulting, and advisory services.

• A “Big Four” consulting firm is leading a large retailers system transformation and has embedded Celonis as part of the program through discovery, testing and hypercare to drive more data drive results throughout their transformation journey 

"Celonis has a very unique opportunity to provide the innovation and the digital capabilities but inevitably it's going to be Celonis and a trusted partner of that organization to deliver the outcomes that matter most."

Automation in CPG and retail companies. Popovic said process mining will be critical in highlighting automation opportunities. "Thorough analysis of elements like the picking process and route optimization is necessary for implementing either a hybrid solution combining human and automated efforts or a fully automated system," he said.

Peters said process transparency will be at the core of automation at CPG and retailers. "In retail and CPG today, there are a lot of processes that are little black boxes where transparency is lacking. That lack of transparency hampers automation," she said.

Reznik added that process mining advances techniques such as Lean Six Sigma and Kaizen. "If you can understand the various inefficiencies, you can apply automation in a much more thoughtful and higher impact way," said Reznik. "Then you can monitor that you're actually realizing the value of this automation."

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Larry Dignan

Editor in Chief (former)

Larry Dignan is the former Editor in Chief of Celonis Media. Before joining Celonis, he was Editor in Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine.