Major brand owners use data to drive growth

08 October 2010

NEW YORK: Major brand owners like Procter & Gamble, FedEx and Coca-Cola are leveraging new data management systems as a means of driving growth.

Research group Ovum recently released a report suggesting poor quality information costs US corporations $700bn (€501bn; £438bn) a year, or 30% of revenues, due to lost customers and sales.

Incorrect and out-of-date records, missing material and inconsistent formatting were argued to waste time and leads, alongside causing sub-optimal resource allocation and inaccurate pricing.

"With such a high cost, it is imperative that businesses get to grips with this issue," said Madan Sheina, an Ovum analyst.

"If more did, the economy would be in a better position to recover from the downturn, and emerge more competitive when the upturn arrives."

IDC estimates the business analytics segment will post compound annual growth of 7% from 2009-14, as firms consolidate insights yielded by sources including social networks, search and retail.

"After three decades of existence, the business analytics market is finally reaching the mainstream market and gaining status as a formal management discipline," said Dan Vesset, programme vp at IDC.

Last month, Unilever, the FMCG giant, signed a global deal to use Terra Technology's "Demand Sensing" platform, which promises to reduce forecast errors by as much as 50%, having trialled it in the US.

Gary Calveley, Unilever's group vp, customer service excellence, said this should enable the maker of Knorr and Hellmann's to "improve market responsiveness and decrease costs."

"As the global economy continues to be volatile and consumer spending remains unsteady, consumer products companies must accurately predict sales to decrease costs and maintain profits," he added.

"Improving forecast accuracy and inventory planning helps Unilever meet consumer demand for products without carrying excess inventory."

Elsewhere, FedEx is combining its less-than-truckload and freight units, offering a unified service and a choice of "priority" or "economy" shipments worldwide.

Fred Smith, FedEx's ceo, argued this could herald a "paradigm shift" in the sector.

"I don't know of a single project that we've ever done inside FedEx where we have had more extensive operational research modeling and customer focus group research than we have on this project," he said.

"I don't think this would have been possible a few years ago, absent the IP capabilities that are now available on a real-time basis, which allow you to utilise the terminals much more efficiently than was historically possible."

Procter & Gamble, the consumer goods manufacturer, has also unveiled plans to digitise various functions, generating tangible benefits.

"We are standardising, automating and integrating systems and data, so we can create a real-time operating and decision-making environment," said ceo Bob McDonald.

"We're targeting a sevenfold increase in real-time data availability. By getting the right data to the right decision makers at the right time, we can become increasingly efficient and productive."

Irial Finan, president of bottling investments and supply chain at Coca-Cola, revealed it has undertaken a similar process.

"The recession forced us to look under every stone and question everything we took for granted," he said.

"We're going to end up with fewer information technology systems, so that a single integrated system can tell our customers exactly where their order is, where the truck is."

The McCombs School of Business and the Indian School of Business interviewed 150 members of the Fortune 1000, and showed this may prove profitable.

They found a 10% uptick in data effectiveness would enable the average respondent to develop new products adding $17m in revenue and attract consumers worth $14.7m.

Data sourced from Ovum, Unilever, SeekingAlpha, EIU, IDC, EIU; additional content by Warc staff