DSI Blog


IOT In CPG: Connecting Customers and Business with Real-Time Information

Posted by on June 4, 2014 12:00 am

For the consumer packaged goods (CPG) industry, the digital economy presents as many challenges as it does opportunities. The home of the future is at the center of the consumer narrative in the Internet of Things (IoT). Heralded as the smart home, the sensor-equipped appliances within collect and transfer data to increase the efficiency and convenience of everyday tasks, including shopping. In such a scenario, the refrigerator talks to the coffee pot, which talks to the toaster and without human interaction, the grocery list is not only made, but also the order is submitted to the grocer to be delivered later that day. While this level of automated purchasing is still on the horizon (though advancing quickly), IoT use cases in the CPG industry continue to broaden, with immense potential for future innovation in how businesses can get their product to customers.

The smart home example above isn’t far off with start-ups and technology giants alike developing new ways for customers to order goods anytime and anywhere. Amazon’s recently released Dash Buttons are a prime example of how businesses are already finding new ways of connecting directly to customers in the home through IoT. Pushing one of these Wi-Fi-connected, product-specific buttons automatically submits an order to Amazon in a pre-set amount. Amazon and others are also at work embedding sensors into household objects to measure usage and automatically prompt re-orders.

While ecommerce is rapidly growing in popularity and evolving with IoT, online transactions make up only 1% of overall product purchases in the CPG industry. Brick and mortar stores still constitute the majority of purchases made today. That’s why traditional methods of in-store marketing are as important as ever—especially in light of how they can be augmented by IoT capabilities.

Product placement in the store is a primary method of getting brands in front of consumers, but with distributors sending multiple drivers to hundreds of stores and as many vendors vying for prominence, it’s difficult to ensure optimal placement. CPG companies pay a premium for end caps and other product placement opportunities, but with the addition of sensors, it may be easier to ensure a return on that investment. With inexpensive sensors attached to their in-store displays, CPG companies can use geolocation sensing to ensure correct placement in a store, without distributors having to send a representative to check in person. Sensors could also be used to collect data on how products sell based on location and other factors—ultimately helping companies find the best placement for their products.

Long before products are stocked on grocery shelves, however, machine communication can enable efficiency and real-time, actionable data for CPG companies. Upstream in the supply chain, many manufacturers depend on machine-to-machine (M2M) integration to streamline processes on the shop floor. Old Dutch Foods, a leading snack food provider, uses the DSI mobile platform for their fixed scanner M2M integration. With scanners on the production line integrated into their system of record, Old Dutch Foods has real-time access to manufacturing data for production planning and informed decision-making.

As the pace of technological change continues to increase in CPG, keep reading DSI Labs to stay up-to-date with the latest news and thought leadership, especially as it applies to this particular industry.

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