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Aforza, a digital twin platform for orchestrating consumer packaged goods sales, has landed $22 million in series A funding. The investment will help grow employees and create a new U.S. headquarters. Investors included DN Capital, Bonfire Ventures, Daher Capital, and Next47.
Consumer packaged goods (CPG) include food and beverage, alcohol, beers and spirits, consumer health care, household products, tobacco, pet care, and consumer electronics. The company was founded by former Salesforce execs involved in CPG efforts.
The cloud service sits on top of Salesforce and Google Cloud platforms and helps connect the dots across key processes required to sell consumer goods. This includes commercial planning, field sales to retail channels, coordinating promotions, orchestrating distribution, and tracking the impact of promotional experiments. This allows teams to iteratively experiment with ideas across different markets and scale up the successful ones.
Growing in a slow growth market
The company plays in the $14.5 billion consumer packaged goods (CPG) software market led by SAP, Microsoft, Adobe, and Salesforce, according to Apps Run the World. As a whole, this category of tools is only growing at 1.5%.
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However, Aforza believes its strategy focused on building digital twins to enhance workflows gives it a competitive edge. Research from Oliver Wyman found that companies using legacy CPG platforms lost at least 5% of sales because of lack of availability. And Progressive Grocer found that 70% of the money invested into trade promotion programs was unprofitable.
“We see an inherent disconnect across the industry in the way commercial planning and field sales teams are working together. This is both in the way they communicate with each other and the systems they use,” Aforza CEO and cofounder Dominic Dinardo told VentureBeat.
Vendors are exploring ways to create digital twins for more ephemeral things like digital twins of the organization and supply chains. Aforza is arguably creating something similar for product distribution.
For example, there are hiccups between the applications used for finance, trade planning, sales, and marketing. Even when these systems are integrated together, the data flow only provides historical context. As a result, finance needs to wait to see the impact investments, trade planners have trouble tracking execution, and sales teams have difficulty tracking which stores faithfully carry out the promotions.
Aforza believes that a digital twin of the sales and distribution system helps to align these efforts and provides real-time data exchanges across different workflows such as:
- Launching highly targeted promotions, measuring results, and then simulating different scenarios to estimate budget impact.
- Connecting new plans to the retail auditing process to see which stores comply with promotion agreements and correlate these efforts with sales, pricing information, and competitive product strategies.
- Capturing the financial progress and ROI of a new promotion in real time so that teams can launch multiple experiments across various markets and then pivot to the most successful ones.
Digitizing ephemeral things
Digital twins are typically associated with concrete physical things like cars, airplanes, or buildings. Supply chains and distribution channels are a bit more ephemeral, which can make it difficult for everyone to see the outlines and mechanics of how it works, how it breaks, and what strategies bring the most success.
Aforza’s tools provide a digital twin of a company’s route-to-market and distribution channel. This approach has strong parallels with supply chain digital twins because it provides a real-time closed loop of information across multiple parties.
In other industries, the digital supply chain twin is a digital copy of a company’s actual supply chain, with inputs fed into the model in real time. Aforza does something similar for trade promotion ROI and optimization.
The CPG industry is starting to adopt the term “trade promotion execution” (TPX) to describe the lifecycle of experimenting with new marketing and promotion ideas. This helps companies close the loop between trade promotion planning and retail execution. They can plan, execute, and improve promotions in real time.
One thing companies need to keep an eye on is compliance. Just because a larger retailer has taken your money to launch a new promotion does not mean that every branch will faithfully hang the new signs, which some managers may find disagreeable or too much effort. This may hurt sales, but also planning teams cannot properly correlate sales changes with what is happening in the stores.
Another key element of building a digital twin is understanding how outside events like the weather and the competition affect sales efforts. For example, an ice cream company may want to experiment with promotions across several outlets by the beach. Meanwhile, a competitor has just launched a series of competitive campaigns that are hitting sales. The first field team picks up on this, which is immediately shared with the digital twin. This input is fed into an AI model, which automatically optimizes the targeting, suggests a set of new promotions for the sales team to run, and predicts the impact of various strategies for outmaneuvering the competition.
Dinardo maintains the Aforza approach is part of a much larger trend driving digital transformation across various industries.
“The digital twin concept is all about moving away from using historical data and outdated analytical models to inform your decision-making process, towards a real-time, closed-loop way of working,” he said.
He points to the success of other leaders such as Veeva Systems in the life sciences industry and Vlocity (Salesforce Industries) across the communications, energy & utilities, and health care sectors.
“I am a great admirer of what they have done and how they have connected planning to execution in real time using the cloud,” Dinardo said.
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