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How COVID-19 is Making Brands Rethink Their CPG Supply Strategy

The pandemic changed everything. How we work, attend school, meet people, and, of course, how we buy things. In 2020, consumer behavior shifted as well. Suddenly, every consumer wanted curb-side pick-up or online purchases delivered right to their homes. As if that disruption wasn’t enough, supply chains buckled and out-of-stocks abounded due to panic-buying and pantry-stocking This led retailers and suppliers to adapt to the new conditions and this shuffle came at a price.

In a normal year, out-of-stocks for all categories of CPG goods cost retailers about $48 billion, according to a report from IHL Group. In 2020, just the top 10 CPG categories totaled more than $2.93 billion in missed sales due to out of stocks, according to NielsenIQ data. More than $800 million was from bath tissue out-of-stocks alone. In the face of these harsh numbers, companies began to look for solutions.

 One of the most prominent solutions seen across many different sectors is a renewed appreciation of how technology can help strengthen supply chains, target ads and predict demand. CPG brands in particular turned to tech solutions, revving up their digital media buys while channeling resources to “buy online and pickup in store” (BOPIS) options for consumers. And, of course, they also turned an eye towards how technology can help create more robust supply chains to prevent out-of-stocks.

In March, The Consumer Brands Association, released a study after analyzing the effect of the pandemic on CPG companies. The CBA called for distributed “supply networks” to become the new normal, askewing the traditionally hyper-efficient supply chains from the before times. These networks, they say, will be built with an underpinning of technology and data. According to the report, “[d]ata is the lifeblood of shaping the future of knowing demand.”

The easiest way to prevent out-of-stocks is to know exactly when and where consumers will want your product. But, according to experts, this hasn’t been the focus for CPG companies. Dr. Kurt Jetta, who has more than 30 years in the CPG and grocery analytics industry, made the observation that a major failure of CPG companies during the pandemic has been a lack of good demand planning. “Over the years, CPG companies have become a bit lackadaisical when it comes to demand planning,” Jetta said. And other industry stalwarts agree. A study from Bain & Company unpacked lessons learned about supply chains during the pandemic. The key takeaway: build resilient supply chains with a focus on improving forecasting accuracy. To do this, the study recommends seeking advanced analytics, which they say can improve supply forecast accuracy by 20-60%.

Kinsa Insights captures unique data the healthcare system misses entirely — data from mildly symptomatic individuals before they go to the doctor, data on how fast an illness spreads in the home or in school, and data from underserved communities that are underinsured, seek care late or not at all. This allows Kinsa to understand emerging illness trends weeks ahead of other systems. 

The ability to accurately forecast demand depends on hyper-local and timely data. Kinsa Insights’ proprietary demand forecasting engine pinpoints where outbreaks are occurring in real time and accurately projects where future outbreaks will occur.

Brands use Kinsa Insights to plan their supply chain down to individual store locations.. Our solution enables brands to drive in-store sales by avoiding out-of-stocks and deploying products where they are needed the most.

Learn how brands saw not only a 50% reduction in forecasting error, by optimizing for illness level and geography,  they also experienced $2 million in additional product demand, a 55% increase in ad engagement, and a 4-to-1 return on incremental ad spend (iROAS).

Contact insights@kinsahealth.com or send me a message to see for yourself how Kinsa Insights helps make unpredictable demand predictable.