4 minute read 9 Jan 2019
Brewer inspecting sample of beer from tank in small brewery

How intelligent automation is impacting consumer packaged goods

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EY Global

Multidisciplinary professional services organization

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4 minute read 9 Jan 2019

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There has been much progress for intelligent automation (IA) in the consumer packaged goods (CPG) industry.

This article is structured in two parts. The first focus is on the beverage industry in CPG — specifically how a North American brewery decided on a plan to maximize its ROI for its intelligent automation projects. Second, the article reviews why CPG companies should look at IA opportunities to continue growing in a sustainable way.

The US beer industry has seen 55% growth, from 4,500 active permitted breweries1 in 2014 to more than 7,000 active permitted breweries.2 in 2018. However, because of inefficiencies in the value chain at many of these breweries, there are significant opportunities to automate operations with emerging technologies.

As an example, one North American brewing company wanted to make the business case for an IA implementation in its current ecosystem. It believed there were multiple opportunities for robotic process automation (RPA), machine learning, chatbots, drones and blockchain. However, the client was also careful to demand a solid business case and the deployment of proofs of concept as a precursor to broad automation rollouts.

The problem we are facing is beyond us as a company and even our industry. The opportunity is real, and we need to adapt and evolve to stay competitive.
CPG client

The company followed a strategic approach for conducting an end-to-end assessment of hundreds of processes of the organizational ecosystem in functional areas such as IT, finance, accounting, human resources, marketing, sales, customer service and supply chain. The concept was simple: analyze the entire value chain using one of the best Business Process Model and Notation tools to create a massive repository of process maps to document and aid the intelligent automation analysis.

Through the process-mapping exercise, the company incorporated specific process parameters with the most common path and noted outliers. The analysis included a review of whether the proposed emerging technologies were well-suited in the client’s current digital ecosystem and development framework.

Focusing on IA, industry benchmarks were cross-referenced and analytical tools used to find specific processes to help off-load mundane and repetitive tasks from employees, thus allowing them to focus on higher-value work. Case in point: the brewer had a specific procurement process that included vendor onboarding, raising requests for proposal and issuing the purchase order. Part of the project was to examine ways for the brewing company to increase its efficiency and automate order processing and deliveries from various vendors. The organization also explored ways to automate the maintenance and operational procedures concerning the registry of new material that enters the production division.

Overall, the analysis of many of the client’s processes showed that about 20% of the processes could benefit from intelligent automation, leading to significant cost savings. Based on the analysis, the client agreed to carry out select opportunities in the areas of RPA, optical character recognition and machine learning.

EY’s Supply Chain Reinvention Framework incorporates intelligent automation as a critical enabler of transformation, focusing on solving real supply chain problems with the right combination of digital technology, process redesign and operating model alignment.
Andy Brown
Executive Director, Advisory, Ernst & Young LLP

As a rule, when implementing IA, organizations should consider the impact on the existing workforce and not act haphazardly. And, of course, any technology deployment should have an accompanying change management strategy to ensure that people can adapt and align with change. Intelligent automation should be part of an overall digital strategy, implementation and change management plan, along with an understanding of the effects on the operating model to align operations with strategic business goals.

There are some processes that cannot simply be replaced by a software bot. It is critical to take a strategic approach to intelligent automation.
Maria Elshamy
Executive Director, Advisory, Ernst & Young LLP

CPG industry of the future

Based on data from the US Department of Commerce, the US consumer market is the most robust on the planet. In 2016, families purchased nearly $13 trillion in goods and services, or nearly a third of the entire world’s household consumption.3 However, a sample of various Fortune 500 CPG companies shows that operating margins are down 10% in 2018, compared with the highs of 2013–15. With lower operating margins, it is likely that the CPG industry would benefit from IA techniques such as scripted codes (i.e., bots) that collect, organize, assimilate and analyze the flow of goods and services. Use of software bots to automate manual processes could offer cost savings and allow workers to focus on areas where they can use their cognitive capabilities to more effect.

With so many opportunities for intelligent automation, what’s the best way to discover the areas that can lead to maximum ROI? First, a structured approach that includes a strong business case for intelligent automation, along with proper technical and business considerations, is warranted. In this way, a firm can check all options and decide on those that offer the greatest business impact within an agreed-upon time frame. It is also important that IA projects are closely paired with change management efforts to promote the highest levels of adoption throughout the organization.

Otherwise, without a suitable change management effort, the intended benefits of an intelligent automation project will likely never materialize.

Summary

Intelligent automation can provide many opportunities for the CPG industry. However, it is important to adopt the technology using a strategic approach.

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By

EY Global

Multidisciplinary professional services organization

Contributors