In a rapidly changing food industry, remaining stagnant may compound the negative effects of a competitive market. With the recent changes in the CPG industry, it’s evident that both retailers and manufacturers must make some changes or risk losing their competitive edge.

From Amazon purchasing Whole Foods to the increased U.S. penetration of Aldi and Lidl, it’s time for manufacturers and retailers to disrupt the processes they have used for years and work together towards mutually quantifiable results. Bridging this gap means saying goodbye to disagreements and competition around who has the most to gain, and looking forward to a greater mutual benefit driven by data intelligence.

A data-focused approach utilizing constraint-based modeling between manufacturers and retailers is essential to optimizing in-store performance concerning the significant annual trade promotion investment.

Retailers typically have their data in the form of POS, loyalty cards and inventory, while manufacturers have their shipment, spending, and any applicable DSD or syndicated POS data in addition to rich consumer analytics. Insights from these data sets are rarely shared between manufacturer and retailer in a collaborative setting. Worse yet, it’s rare to see this data organized in a way that makes it useful in the annual promotion planning decision-making process.

Part of the reason for this lack of collaboration is that both manufacturers and retailers have held on to a “this is just how we do business” approach, which leaves the discussion for joint-business planning ideas on the table and not effectively executed.

In order for these two groups to successfully work together, collaboration should take two forms: post-event analysis and optimized planning.

Manufacturers and retailers today can utilize the power of constraint-based modeling to develop annual promotional plans optimized for profit, volume and revenue aligned to mutually constrained objectives. This predictive picture with quantified KPIs presented before the plans go live leaves nothing to gut check on future results. With this, the conversation shifts from justification of a promotional tactic or plan to one centered on fact-based decisions, with a calculated understanding of how together companies can build and execute a mutually optimal strategy. Enacting this process allows organizations to remain agile enough to make educated pivots when necessary without exposing themselves to unnecessary risk.

Of course, being agile also means having a thorough understanding of the outcome of these new plans. Bringing together manufacturer and retailer data into a single intelligence center for post-event analysis allows collaboration around retail execution, promotional performance and competitive strategy. Sharing this near real-time picture of the results shifts the focus away from the competing priorities of retailer and manufacturer. Instead, stakeholders are able to focus on what is actually happening in stores and what are their best options to improve it.

Industry disruption should be an eye-opener for retailer and manufacturer alike, as they must become aware of the changing consumer habits and stay ahead of the competition in the CPG industry. Disruptions, whether in the form of new market players, mergers and acquisitions or something yet to be seen, are not going away. The only way to prosper amidst disruption is to make intelligent, informed, data-driven decisions that turn the potential threats into an opportunity. For today’s CPG leaders, this means adopting the predictive and quantifiable analytics to partner with retailers to mutually optimize results.