Filippo Passerini provides an overview of the steps that P&G took to improve its analytic capabilities and harness the power of big data in real-time.
We have a base set of analytical models that allow us to do a deep-dive on different aspects of the business. For example, one model is focused on our 40 largest and most profitable product categories in the most important geographic markets. These top 40 businesses represent about 50 percent of sales and nearly 70 percent of our operating profit, so you can see why it is an important model. Another example is our model that focuses on identifying ways we can make our supply chain more efficient.
One of the ways in which IT helps simulate the in-store experience is by creating virtual stores to see the products on the shelf. What was the genesis of this approach? What are the benefits of it?
Innovation is the lifeblood of P&G. It is the primary way we drive growth, prevent commoditization of categories, reduce cost and deliver consumer value. So we are constantly partnering with our cross-functional colleagues, in this case R&D and Design, to improve our innovation capabilities.
We try our best to anticipate what is coming, to detect new trends and to devise the right strategies to address those trends before they impact our business. So a few years ago, we saw a trend that was having a major impact on the world: speed of product innovation to market. This was across many industries: automotive, consumer electronics, fashion and also, frankly, our Consumer Packaged Goods industry. You may recall, as an example, that car manufacturers used to produce a new model every five or six years. Now it is every 12 months. Because of this dramatic speed of product innovation to market across all sectors, we decided that we needed to reinvent some of the ways we do work.
In the past, packaging design was costly and time consuming. We would create physical mockups for our consumer testing. Design and production of these prototypes could take from six to 12 weeks. It was difficult to efficiently reflect changing consumer preferences and needs using traditional, physical research methods.
Today, using virtual technology, designs are created much faster and at a fraction of the cost. Consumers respond to a virtual mockup of our new packaging. We have virtual stores and virtual shelves, which we can literally build in hours and days instead of weeks and months. Consumer insights are integrated more efficiently throughout the process, enabling our brands to deliver a product and shopping experience that delights.
This has been revolutionary, saving us millions of dollars and dramatically accelerating the time it takes to launch a new product in market. Virtual solutions are now used on more than 80 percent of our initiatives, enabling our brands to reach consumers faster, more efficiently, and with a product that exceeds her expectations.
About the Author
Peter High is president of Metis Strategy, a boutique IT-strategy consultancy based in Washington, DC. A contributor to CIO Insight, High is also the author of World Class IT: Why Businesses Succeed When IT Triumphs, and the moderator of the podcast, The Forum on World Class IT. He can be reached at firstname.lastname@example.org.