Demand Planning in an Inflationary and Volatile World: Digital Strategies for Resilience
In today’s economic climate, consumer products (CP) firms face a relentless tide of inflation, supply chain shocks, and unpredictable consumer behavior. The volatility is not a passing phase—it’s the new normal. For leaders in food, beauty, and household goods, the challenge is clear: how to adapt demand planning and supply chain strategies to not only survive, but thrive amid ongoing uncertainty. The answer lies in embracing agile digital operating models, advanced analytics, and real-time consumer engagement to build resilience and unlock new opportunities for growth.
The Inflation Imperative: Why Digital Transformation Can’t Wait
Inflation has hit the CP industry at varying intensities across sectors. Food and beverage companies, for example, have seen dramatic increases in raw material costs, leading to weakened consumer demand and a shift toward private-label brands. In contrast, beauty brands have experienced the so-called “Lipstick Effect,” with consumers continuing to purchase despite price hikes. These sector-specific dynamics underscore the need for CP firms to move beyond traditional, reactive approaches to pricing and supply chain management. Instead, they must adopt digital strategies that enable rapid, data-driven decision-making and greater agility in the face of market shocks.
Three Digital Principles for Resilient Demand Planning
1. Agile Digital Operating Models
To respond to volatility, CP firms must transition to agile organizational structures. This means empowering cross-functional teams to make real-time decisions based on market signals, rather than relying on slow, hierarchical planning cycles. For example, pricing decisions that once occurred biannually are now made quarterly—or even more frequently—as inflation and consumer preferences shift. Agile teams, supported by digital tools, can quickly adjust product assortments, pricing, and promotions to match local demand and supply realities.
2. Advanced Analytics and Data-Driven Decision-Making
The foundation of modern demand planning is data. Yet, many CP firms analyze less than one percent of the data they collect, leaving valuable insights untapped. By investing in advanced analytics, machine learning, and AI, companies can transform raw data into actionable intelligence. This enables:
- Revenue Growth Management (RGM): Dynamic pricing, assortment optimization, and targeted promotions based on real-time demand signals.
- Supply Chain Visibility: End-to-end tracking of inventory, supplier performance, and logistics, allowing for rapid response to disruptions.
- Predictive Demand Sensing: Using first-party data, social listening, and search insights to anticipate demand spikes or shifts at the shelf level—physical or digital.
For instance, a leading global retailer leveraged machine learning to improve e-commerce order picking rates by 35% and on-time delivery by 4%, demonstrating the tangible impact of analytics on operational efficiency.
3. Real-Time Consumer Engagement
In a world where brand loyalty is fragile and consumers are quick to switch, real-time engagement is critical. CP firms can harness crowdsourced data, social media sentiment, and direct-to-consumer (D2C) channels to gain a 360-degree view of consumer needs and behaviors. By integrating these insights into demand planning, companies can:
- Personalize offers and communications to drive loyalty.
- Reduce churn by anticipating and addressing pain points.
- Test and launch new products with less risk and faster speed-to-market.
For example, Mars used machine learning to monitor social media sentiment and dynamically adjust Snickers pricing in convenience stores, capitalizing on real-time consumer moods to boost sales.
Sector-Specific Strategies: Food, Beauty, and Household Goods
- Food: With price-sensitive consumers and volatile supply chains, food brands must double down on predictive analytics and flexible distribution models. Subscription services and curated D2C offerings can help stabilize demand and build direct relationships with shoppers.
- Beauty: The beauty sector’s resilience amid inflation highlights the power of brand affinity and personalized engagement. Advanced analytics can inform dynamic pricing and targeted promotions, while D2C channels enable brands to collect rich first-party data and deliver bespoke experiences.
- Household Goods: For these essentials, maintaining availability and optimizing inventory across channels is paramount. Real-time data from store locators, online search, and social listening can help brands anticipate stock-outs and adjust supply accordingly.
Building the Digital Backbone: Omnichannel Data Ecosystems
A robust omnichannel data ecosystem is the linchpin of resilient demand planning. By connecting customer data (preferences, behaviors, transactions) with product and supply chain data (inventory, pricing, logistics), CP firms can:
- Deliver seamless, personalized experiences across online and offline channels.
- Prevent stock-outs and overstock by aligning inventory with real-time demand.
- Enable rapid test-and-learn cycles to optimize offers, pricing, and product launches.
For example, a global CPG leader partnered with Publicis Sapient to build a digital marketing and customer data platform, resulting in a 75% increase in campaign curation speed and a 25% boost in conversion rates.
The Path Forward: Continuous Innovation and Resilience
Inflation and volatility are here to stay, but so are the opportunities for those who act decisively. CP firms that invest in agile digital operating models, advanced analytics, and real-time consumer engagement will be best positioned to manage risk, optimize pricing, and maintain customer loyalty—no matter what the future holds. The journey to resilience is ongoing, requiring continuous innovation, cross-functional collaboration, and a relentless focus on data-driven decision-making.
At Publicis Sapient, we help CP firms navigate this new reality—transforming uncertainty into opportunity and building the digital backbone for sustained growth. Ready to future-proof your demand planning? Let’s start the conversation.