How new solutions remove bottlenecks for fast-moving consumer goods organizations

Eighty-two percent of global consumer products and retail executives believe that supply chains need to change significantly to meet the evolving challenges of modern marketplaces, according to the recent Illuminating the path report from the Capgemini Research Institute. These leaders are focused on shaping consumer demand and building cost efficiency through better planning, process improvement, and automation to boost productivity and reduce manual effort.

Fortunately, solutions recently made possible by artificial intelligence (AI) are very effective at dealing with one big supply-chain challenge: reconciling trade claims and deductions between fast-moving consumer goods (FMCG) manufacturers and their retail customers.

Managers at FMCG companies often struggle to reconcile trade claims and deductions taken by customers to fund promotions, cover items damaged in transit, and other issues. Some of the difficulty lies in varying trade practices between customers, which range from small stores to large chains. Other challenges come from inconsistent processes across FMCG company departments.

Deductions are often legitimate, of course, including claims for damages and returns, but a significant portion stem from errors or disagreements, and this creates a time-consuming and costly resolution process. For example, traditional manual processes for researching and verifying claims don’t provide much help, as they eat up time and resources while introducing errors. For example, we estimate that conventional optical character recognition (OCR) captures data from claims documents with only about 60 percent accuracy.

New AI-based supply chain solutions solve these claims-management challenges more accurately, faster, and at less cost. These free up resources for FMCG organizations and their customers while reducing vulnerabilities in supply chains.

The problem with trade claims

Manufacturers accept deductions from payments owed by customers for a variety of reasons, including:

  • Trade promotional deductions designed to drive sales. Deductions typically occur after the manufacturer delivers the goods and invoices the customer, requiring reconciliation and settlement after the fact.
  • Pricing discrepancies between the amount the manufacturer invoices the retailer and what the retailer expects to pay. These mismatches may result from misunderstandings, pricing errors, or other factors.
  • Damaged or returned goods, for which retailers deduct payment to compensate for products they can’t sell.
  • Complicating matters further, retailers may unexpectedly take deductions for fees, penalties, or other reasons.

Retailers submit documents to support claims via any convenient channel and format, including email, enterprise resource planning (ERP) software, scanned documents, and even hand-written notes in the case of smaller shops.

FMCG organizations often must resolve claims for deductions one by one, calling and emailing retailers and colleagues within their own companies, with supporting documents such as agreements and proofs of purchase circulating between them. Even large FMCG organizations may lack unified processing systems, increasing the possibility of costly errors and potentially involving hundreds of employees. The entire process may take a month or more to complete for each claim, with cash flow held hostage all the while.

The impacts of unresolved trade claims on FMCG organizations include:

  • Cash flow issues reducing liquidity and the amount of credit available to the manufacturer and, consequently, what the organization can extend to customers
  • Reduced sales due to credit extended to customers reaching maximums sooner
  • Increased administrative overhead as teams manually sort through PDFs, image files, and other documents sent from retailers to substantiate claims
  • Inaccurate financial reporting impacting balance sheets and, ultimately, the bottom line
  • Strained customer relations over disputed claims, potentially reducing future business opportunities
  • Internal friction as sales, finance, and customer service departments point fingers over lost sales, inconsistent reporting, and missed deals.

Intelligent  trade claims and deduction management

Today’s competitive FMCG landscape requires a more sophisticated, efficient, and less costly approach to handling trade claims. Numerous technologies are effective here.

⦁ Intelligent document processing: AI-driven OCR and document processing can handle content in various languages, formats, templates, and images.

⦁ AI-powered classification: Machine-learning algorithms can analyze deduction notices and categorize them based on reason codes. This enables faster and more accurate resolution.

⦁ Agentic AI Solutions: Agentic AI uses autonomous agents to extract data, validate pricing and delivery, and decide on claims. Unlike rule-based automation, it adapts to changing scenarios, handles exceptions intelligently, and reduces manual effort while improving accuracy.

⦁ Advanced data analytics: Analytics can identify trends in trade claims and deductions, pinpointing areas with high error rates or specific customers with frequent disputes.

⦁ Cloud-based solutions: Cloud platforms provide a centralized repository for all trade claims and deduction-related data and documents. This improves accessibility and collaboration for AR teams.

For example, if a retailer sends a photo of goods damaged in shipment, AI can verify the number of damaged products in the picture. Agentic AI can automatically approve the appropriate deduction or flag the claim for further action.

Agentic AI enables autonomous agents to handle routine tasks such as extracting information from emails, invoices, and other documents; verifying pricing against agreed terms and promotions; and checking delivery confirmations. These agents make real-time decisions and adapt to changing conditions, allowing employees to focus on resolving discrepancies rather than spending time on routine, uncomplicated transactions.

For transactions that do require further attention, AI-powered classification algorithms can sort claims, automatically forwarding them to the right team member. In this way, a modern solution can eliminate manual processes which often involve employees passing documents back and forth.

AI-driven solutions extend beyond day-to-day operations by employing advanced data analytics to find trends in claims, highlighting transaction types with higher-than-average error rates and enabling broad adjustments to streamline future transactions. AI can also identify customers with a history of disputes, letting managers provide the personalized attention needed to prevent future deductions.

Cloud-based solutions provide a central, organization-wide database of information about deductions, claims, and associated documents. The result is improved accessibility and enhanced cross-functional collaboration that further streamlines operations and enables better informed and more effective decision-making.

Trade claims management from Capgemini

The future of Trade claims & Deductions management in FMCG goes beyond automation, it’s about building an intelligent, proactive ecosystem that transforms a traditional challenge into a strategic advantage. With evolving AI and automation, companies can shift from reactive to predictive approach, reducing manual work, inter-departmental friction, and fostering clear agreements and communication. This leads to improved cash flow and stronger customer satisfaction.

Unlocking this strategic transformation requires a modern data platform. FMCG trade claim management involves high-volume, complex data from diverse sources like customer agreements, pricing, claims, and delivery proofs. A scalable, extensible architecture is essential to integrate these elements, ensure real-time access, and maintain data accuracy.

Capgemini’s reference solution, illustrated using Microsoft Azure Data Lake, Power Platform, and Azure AI Document Intelligence, enables seamless ingestion from ERP systems, portals, and manual uploads. Azure AI Document Intelligence classifies and processes data across formats, languages, images, and templates. Complementing this, Agentic AI uses autonomous agents that extract data from multiple sources, validate pricing, promotion and delivery, and make decisions to approve, escalate, or flag claims. It also automates the settlement of approved claims, reducing average days to settle claims. Unlike rule-based automation, Agentic AI adapts to changing scenarios, handles exceptions intelligently, and reduces manual effort while improving accuracy and efficiency. Together, these capabilities feed into a unified dashboard that provides full visibility into claim statuses and digitized documents along with customer information, invoice numbers, product details, pricing, and other relevant details empowering business managers to act decisively.

This flexible, vendor-neutral and product-agnostic approach can be seamlessly adapted to any modern data platform, allowing FMCG organizations to leverage their existing technology landscape without being tied to specific tools.

Companies adopting this intelligent, data-driven approach can expect to achieve 50 to 70 percent faster claim processing. A corresponding reduction in person-hours spent on routine interactions will free teams to focus on more complex and higher-level tasks. Organizations should see a 90 percent reduction in open and unresolved deductions. The average time needed to process a claim can go from 30 to 35 days to just two or three days. Additionally, the solution can help organizations eliminate write-offs for invalid claims and recover 0.1–0.3% of revenue-equivalent money.

Embracing the future of trade claims

Supply chain issues keep business leaders up at night like no other set of challenges. Modernizing trade claims with AI-powered solutions in the cloud can go a long way toward mitigating such risks for FMCG companies. These solutions can free up capital and human resources while opening new revenue streams through additional business opportunities.

New solutions can also predict and prevent unnecessary and unsupported deductions. They can streamline operations by reducing manual work and enabling clear lines of communication and effective collaboration between departments. And they can help FMCG organizations improve their cash flows, increase customer satisfaction and retention, and enhance revenues.

Get in touch with us to learn more.