CPGs Turn to Cloud Data to Cut Waste and Costs as Inflation Surges

More than half of the world’s people live in cities. They have no connection to how food is produced or distributed. They just expect it to be on the shelf when they want it.

At least, that’s how it’s worked for the better part of 100 years. The pandemic gave us all a hard lesson in the fragility of supply chain — a word pairing not previously known for thrills — and that lesson also goes for the producers feeling the pain.

“A lot of companies have been kind of forced to break open supply chains they haven’t touched in 30 years and assumed that they could push a button today and then tomorrow the product would arrive. In the last 15 months, within food and other supply chains, that’s not the case.”

So said Are Traasdahl, founder and CEO at Crisp, the open data platform that collects feeds from some of the largest retailers and consumer packaged goods (CPG) brands to inform buying decisions at scale.

In a recent conversation with PYMNTS, Traasdahl said he believes one-third of the world’s food production goes to waste. However, he said that’s fixable with more visibility into the supply chain.

“Nobody makes money out of waste and food waste. The other side of it is out of stock. Nobody makes money by being out of stock,” Traasdahl said. “The ability to optimize the supply chains around having enough product, getting product into the stores when it’s needed and at the same time [not wasting] anything [drops] straight down to the bottom line for everybody.”

Seeing data from some 100 million companies worldwide, “and that’s an $8 trillion industry,” he said, “take one third out of $8 trillion and that’s bigger than most markets in the world. So, there’s a lot of drive here toward changing this and making these supply chains more efficient.”

See also: Data Platform Crisp Believes The Solution To Food Supply Woes Is Cooperation

Feeding Food’s Flywheel

Just as supply-chain snarls can make a mess — and they are — the opposite can be achieved with the right data insights, delivered in ways that enable commerce to keep a step ahead.

Saying that food brands “typically increase their sales between 15% and 20%” by being better suppliers, Traasdahl explained what it means to use data to be that better partner.

“They make sure that they have products on the shelf when a consumer comes to the store. That’s a positive flywheel because now the retailer is ordering more, they’re more reliable and they take more market share.”

On top of that, internal cost reductions can hit 20% to 25% because “they’re taking out so much inefficiency. On the retailer side, it’s typically kind of the reverse of that. The ones that participate in the programs [have] much better service levels and they understand consumers better. Because of that, sales go up for the retailers as well.”

This falls under the heading of “programmatic commerce” where legacy tech like Electronic Data Interchange (EDI) — first developed in the 1960s and popularized by Walmart as an early form of data-based inventory and supply chain management — is getting a needed upgrade.

That’s where platforms like Crisp come in, offering retail and CPG planners subscription-based access to application programming interfaces (APIs) that gives them easier access to supply data so they can keep shelves full — or know when to expect a shortage.

“We think about programmatic commerce as a much … better kind of data driven machine-to-machine communication, collaboration, and exchange of information. It’s much more programmatic and data driven, and [more] computer driven than fax and emails.”

See also: New FDA Rule Could Trigger Blockchain’s Adoption in Food Tracking

A Goal of $1 Trillion

Traasdahl said Crisp expects to see $1 trillion in transactions move over its platform over the next year. The company has been aggressively pursuing enterprise clients, he said, and signed up 15 of them last week alone.

Growth is so promising after the global supply-chain fluctuations we’ve seen over the past two years that Traasdahl doesn’t feel threatened by the competition — or the possibility of waning demand for Crisp’s solutions.

“We’ve started many technology companies before and we’ve always had a lot of competition,” he said, “but three or four years ago, supply chain was not a particularly interesting area for anybody to jump into. I feel that we now have a product out there and very few — or almost no — competitors at all.”

See also: In Europe, Funding Pours In For Online Grocery Platforms