As a CEO you know the importance of data. Data drives your day, from meetings with your direct reports to preparing and presenting information to the board and stakeholders. Luckily, over the past decades, there has been an explosion in the amount and variety of data available to enquire into every single aspect of your business. So, why do you find yourself spending half your time wondering which data to believe?
The answer of course is that throughout the day, you get multiple conflicting insights. Marketing presents numbers on the latest successful campaign, Operations show their own figures on sell-through and margins, while Supply Chain highlights reduced warehouse costs. Yet your CFO still tells you that overall profits are down. Who is telling the truth, and why do things not add up?
The problem lies in the proliferation of departmental solutions that generate the data each thinks they need, but which lacks an integrated enterprise-wide view. As CEO its critical to join the dots – and only the CEO has the perspective, purpose, and power to do this. A new relationship with data is needed in all Industries, including Retail and CPG, if you are to successfully transition to the hyper-personalised, hyper-localised future most recognise as today’s immediate imperative.
Focus on the future
Traditionally, data was for reporting. It was looking in the rear-view mirror to understand what happened, and then use that information to decide what to do next. But what stands before today’s CEO’s looks nothing like what has gone before. The future of Retail and CPG is evolving more rapidly than ever before, and to prepare for what’s next, CEO’s need to lead an entirely new relationship with data.
Rearward-focused reporting has rapidly diminishing value – instead, data must drive real-time engagements and constant improvements, and at a very granular operational level. That means hyper-personalisation of offers and content to each individual, while managing every SKU and every store as unique as they truly are. Silos of data used by different departments to support their own KPI’s and back up decisions made in isolation, put simply, undermine your ability to do this.
A multi-chain Retailer had 16 different ERP systems and so was unable to get a global view of spending or sales, and no way to interrogate revenues and margins across the enterprise. Working with Teradata it linked financial bookings, shipments, inventory and sales invoices across all brands into one set of agreed data. Thereby allowing for a true understanding of cost to serve, and specific key improvement activities to be agreed.
From raw material to valuable product
Delivering integrated data is not a question of investing in some new shiny tech. It is about refining data from numerous touch points into a product that has value, and then distributing that as quickly and efficiently as possible to the places where it can be used most effectively. In many ways it is the same process as retailing products – taking a raw material, adding value through manufacturing it into products that customers need, and then getting it to them as fast as possible. Just as Retail and CPG CEO’s have spent the last decades removing friction from that process, now they must do the same for their enterprise data.
The proliferation of point solutions in each different department has made this harder to achieve. As a result, some companies put this in the too hard basket and hope that the problem will go away (it won’t), while others opt for a rip and replace approach as they misunderstand the issue. Those that are really winning though focus the business’ efforts on how best to fully integrate the data, and then make it available across the entire enterprise. Adopting a collect once, refine once and use many times approach will not only maximise return on data assets and minimise costs, but will create a foundation of trusted, common, data that unifies information for better decision making.
SETTING the right goals
At the heart of this shift is a change in how your data is governed, and the metrics and incentives deployed to ensure its effective use. Updating and aligning companywide KPI’s will be critical to success, as this will help both change management and behavioural change. Future-focused CEO’s will therefore set objectives that leverage and encourage enterprise wide data and team sharing, rather than individual departmental goals.
For example, setting goals for purchasing at the lowest possible cost seems sensible, but if this then leads to excess stock holding, the advantage gained can be quickly eroded by the increased warehousing costs. Instead, if the integrated granular data was made consistently available to all departments, KPI’s based on overall cost to serve can be established and cross-functional teams can collaborate and even scenario-plan different strategies to maximise overall companywide success.
The benefits are vast but instituting this level of change is of course not easy, otherwise your competitors will have all done this already too. Also, this will be essential to succeed today, and even more so tomorrow, but cannot be delegated to individual departments. This will only be done by the CEO’s who are true visionary leaders, while the others just try to keep up.
Top-down governance that changes todays attitude of using data to justify your own point of view, to an obsession with understanding the customer driving every single decision, can only come from the CEO. They must set the scene and create the rules as to how the organisation uses and relates to data, despite it being out of many people’s comfort zone. They will then be the ones who can understand and focus on overcoming the really big challenges/opportunities, rather than those that deliver smaller improvements down at a departmental level. Fundamentally it is about having the vision to invest to become the Retailer/CPG of the future
, rather than merely trying to keep up with the current best in class. Only the CEO can do this, and the CEO’s of the future will be those that make this decision now.