Revolutionizing CPG Operations: PepsiCo and Tapestry Harness Agentic AI

January 15, 2025
Revolutionizing CPG Operations: PepsiCo and Tapestry Harness Agentic AI

The consumer packaged goods (CPG) industry is experiencing a profound transformation, driven by the widespread adoption of agentic AI and enterprise automation. Leading the charge are major players like PepsiCo and Tapestry, who are effectively leveraging these advanced technologies to streamline operations, minimize manual tasks, and boost overall productivity. This article delves into the specific initiatives and strategies of these companies, as discussed during NRF’s Big Show, and examines the broader implications of AI-driven automation within the CPG sector.

Agentic AI as a Disruptive Force

Agentic AI is not merely a buzzword; it is emerging as a major disruptive force poised to revolutionize business operations across the CPG industry. Mark Thylstrup, a data automation manager at PepsiCo, and Karthik Ramakrishan, director of planning systems and RPA at Tapestry, both underline the transformational impact of this technology. By significantly reducing manual efforts and minimizing the need for human validation, agentic AI aims to cut down on both time and costs, thereby making operations more efficient and cost-effective in the long run.

The adoption of agentic AI transcends merely replacing human tasks with automated processes. It’s about enhancing the capabilities of the workforce and enabling employees to shift their focus away from repetitive and mundane tasks. This freed-up time allows employees to engage in more strategic and value-added activities, which not only enhances productivity but also boosts overall employee satisfaction and engagement. The shift highlights the importance of creating a balanced work environment where technology complements human skills rather than replaces them outright.

Current Automation Use Cases

Tapestry, the parent company of luxury brands like Coach and Kate Spade, has been at the forefront of integrating automation to manage various operational tasks effectively. One notable use case showcases automation in managing purchase orders. Traditionally, this meticulous process involved manually uploading data into Excel, which was inherently time-consuming and fraught with human errors. With the adoption of advanced automation tools from UiPath, Tapestry has streamlined this process, ensuring heightened accuracy and efficiency in handling purchase orders.

Another significant application of automation at Tapestry lies in operational reconciliations, where the company ensures consistency and accuracy between numerous systems through automated processes. This automation helps eliminate errors such as phantom transactions, thereby improving overall operational efficiency and enhancing data integrity. PepsiCo, another major player in the CPG industry, has also reaped substantial benefits from automation, particularly in its contractor onboarding processes. Previously, the onboarding process required significant manpower and often encountered issues like access restrictions. The implementation of automated systems has resolved these issues, ensuring immediate access for contractors, thereby reducing idle time and payroll waste significantly and leading to better resource utilization.

Advanced AI Efforts

Tapestry continues to push the boundaries of AI adoption by structuring its data into private and public pools, effectively safeguarding sensitive information while also enabling straightforward access to non-sensitive public data. Among the advanced AI efforts being undertaken is the automation of form completions and the generation of AI-driven chat responses. The AI model guiding this pilot project is meticulously designed to understand various business contexts, which significantly enhances user interaction and data retrieval efficiency.

However, the journey has not been without its challenges. Despite being 90% complete, the project faced numerous hurdles, primarily related to ensuring that AI models possess an accurate contextual understanding. Contextual understanding is vital for providing correct information and avoiding errors. Tapestry’s extensive search for the right balance between speed, accuracy, and cost led them to experiment with various AI architectures. A notable breakthrough came with Anthropic’s Claude 3.5 Sonnet V2 model, a significant achievement that effectively addressed the reasoning limitations previously encountered. This model’s success marked a major milestone in Tapestry’s AI journey, setting the stage for even more advanced applications in the near future.

Challenges and Breakthroughs

Implementing AI-driven automation comes with its own set of challenges, with one of the primary ones being ensuring accurate contextual understanding by the AI models. This aspect is crucial for providing reliable information and preventing errors. Through Tapestry’s experiences, the importance of finding the right AI architecture that balances speed, accuracy, and cost becomes glaringly apparent. After exploring various models, Tapestry ultimately found success with Anthropic’s Claude 3.5 Sonnet V2 model. This model proficiently addressed the reasoning limitations observed in other models, offering a more reliable and efficient solution. The breakthrough with this model marks a significant leap in Tapestry’s AI journey, paving the way for more advanced applications.

Another critical challenge lies in maintaining clean and secure data. Thylstrup and Ramakrishan emphasize that establishing a strong data foundation plays a pivotal role in successful AI implementation. Ensuring data cleanliness is essential to avoid the pitfalls of ‘garbage in, garbage out’ when training AI models. Additionally, data security remains a major concern. The unregulated use of AI tools like ChatGPT could potentially expose sensitive information, underscoring the need for stringent data security measures.

Governance and Data Integrity

The consumer packaged goods (CPG) sector is undergoing a significant transformation, largely due to the integration of agentic AI and enterprise automation. Industry giants like PepsiCo and Tapestry are at the forefront, harnessing these cutting-edge technologies to optimize their processes, reduce the need for manual labor, and enhance overall efficiency. This shift was a key topic at NRF’s Big Show, where the specific strategies and initiatives of these companies were highlighted. By adopting AI-driven automation, these leaders are not only improving their operational workflows but also setting new industry standards. The broader implications of these advancements suggest a future where the CPG industry becomes increasingly efficient and innovative. The article further explores how these advancements impact the broader scope of CPG operations, providing insights into how these technologies can create competitive advantages and transform the marketplace. This piece sheds light on the ongoing evolution and future prospects of AI in the CPG world, making it essential reading for industry insiders.

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