#3. Advanced analytics and AI/ML for speed in decision-making

#3. Advanced analytics and AI/ML for speed in decision-making

Right now, retailers are dealing with wild fluctuations in customer demand at a moment when there is unprecedented global supply chain disruption.

According to one analysis, these concurrent disruptions have the potential to decrease retailer earnings by 20 to 40 per cent in the near term, with between 15 and 20 per cent of that continuing if supply-chain disruptions go unaddressed. 8

How can CFOs mitigate the effects of this disruption, along with so many others, in the near- and long term?

Retail CFOs need answers fast. For retail CFOs making critical decisions on a weekly or daily basis, there’s a widening gap growing between those who can rapidly optimize every aspect of the business and those who can’t. Only 43 per cent of CFOs used advanced financial modelling between 2019 and 2021 to identify future risks and opportunities. 9 It’s not surprising that 72% of CFOs plan on improving the flexibility of budgeting and forecasting in 2022. 10

With disruptions from every side continuing at pace, CFOs can’t afford to spend days making decisions or maintaining a fixed way of thinking. Cutting-edge financial tools that feature advanced analytics, artificial intelligence, and machine learning (AI/ML) are the backbone of any strategy to speed up decision-making and identify new ways of looking at problems.

Capable of combining internal data with external information, like industry benchmarks or even the weather, AI/ML can discover connections and correlations in discrete parts of the business where no one would think to look.

Plus, CFOs can test their assumptions and model various scenarios using company-wide key performance indicators (KPIs) to better understand the direct implications of both financial and commercial variables. They can see how when one commercial knob is turned, it has a particular financial effect. This functionality provides the foresight necessary for CFOs to see when plans are on the wrong track.

From demand forecasting to providing key insights about targeted pricing and promotions or even smarter e-commerce product offerings, AI/ML speeds CFOs' decision-making by identifying strategic priorities in the face of disruption.

8. McKinsey. “Ten steps retailers can take to shock-proof their supply chains.”
9. Accenture. ”CFO Now: 2021 Research Report.”
10. Gartner. ”CFO survey shows improving the flexibility of budgeting and forecasting will be the top focus area in 2022,” November 2021.

“The world is moving faster, which means expectations for quick insights have increased exponentially. Ten years ago, you could take a week or more to complete your month-end. Now, you’re expected to complete it in three days. You also have to provide explanations of your figures much faster.”

CFO, HSO customer, Garden and outdoor retail chain