CGT Inside News - 11/2/2005
CGT 2005 Conference Recap: Industry Experts Examine the State of the CG Market
November 2, 2005 - According to the 2005 Consumer Goods/Retail Shared Strategy Study from CGT, RIS News and Forrester Research, 75 percent of retailers indicate they are now working with trading partners on demand planning and forecasting efforts. This finding was supported at the Consumer Goods Technology 2005 Conference last week, when Christine Overby, principal analyst for Forrester Research, discussed the state of retail/manufacturing collaboration with panel of experts from Associated Wholesale Grocers, Bi-Lo/Bruno's, Nestle Waters/Perrier Group and General Mills. Topics of discussion included: where they are increasing their investments in collaborative technologies; key technologies that firms will evaluate in 2006; and collaborative efforts that yield the biggest ROI.
For more Shared Strategy results, click here to join Overby and Steve Methvin, director of store systems, BI-LO/Bruno's, on November 10th for the CGT Web seminar, "Consumer Driven Collaboration".
In addition to the Shared Strategy panel, a plethora of industry analysts and experts exchanged thought leadership and strategic insight around the theme "Insights to Action: Accelerating Business Performance with Enabling Technologies" at the CGT 2005 Conference, Disney's Grand Floridian Resort, October 25-28. Highlights include:
>An independent study conducted by the University of Arkansas recently revealed that Wal-Mart stores equipped with RFID technology are seeing a 16 percent reduction in out-of-stocks. According to Wal-Mart vice president of information systems Dan Phillips, reduced out-of-stocks are just the beginning. In his keynote address, Phillips shared examples of how Wal-Mart's 130 suppliers both small and large are realizing significant benefit from the use of RFID technology such as improved quality control, increased productivity and end-to-end supply chain visibility. Phillips says the emerging Generation 2 standard will be an enabler for companies looking to gain value from RFID investments because it will reduce tag costs and improve read rates. "It's all about standards," he said. "We're already seeing a 25 percent increase in read rates with the Gen 2."
> The inability to meet consumer needs is the biggest driver for product launch failure at 46 percent. PepsiCo's Rob Le Bras-Brown, director/packaging innovation, shared his experience implementing the process roadmap Stage-Gate, which offers a disciplined yet flexible approach to managing new product introductions. Deploying Stage-Gate at both a leading color cosmetics company and PepsiCo equipped Le Bras-Brown with keys to ensure product innovation success in both "process intense" and "process lite" environments.
> Consumer goods companies allocated 2.8 percent revenues to IT budgets in 2005, but IT spending is expected to grow 4.1 percent in 2006, according to AMR Research's Kara Romanow. She and a panel of CG executives examined these and others findings from the 2005 AMR Technology Trends Research Study including:
o 43 percent of IT investment is shaped by consumer-driven issues.
o The $662 million spent on RFID budgets in 2005 is expected to increase to $1.2 billion in 2006.
o 65 percent of CG companies consider customer compliance to be the No. 1 business driver for RFID investments.
> The DSD system is a powerful resource. DSD total share of packaged food equals 21 percent of space, 25 percent of sales and 52 percent of profit. During a event workshop, Coca-Cola's VP of Business Development Anne Dozier and Kraft/Nabisco's VP/Customer Logistics Dale Brockwell shared how C companies can drive DSD supply chain capabilities and efficiencies.
> Don Davis, VP of Materials Management for Revlon, revealed how an inventory transformation project reduced Revlon's overall inventory 26 percent while meeting a 97 percent fill rate target -- proving that achieving lower levels of inventory is possible while struggling to maintain or increasing service levels to customers.
> While some consolidation exists within the retail, market competition is driving many retailers to differentiate themselves from the pack. In the closing keynote panel, executives from three of Wal-Mart's key suppliers -- Bell Sports, Johnson & Johnson and Kimberly-Clark -- discussed the challenge of meeting multiple diverse customer requirements and prioritizing IT investments to meet those requirements while continuing to push top and bottom-line growth. "The most significant challenge for us is to identify what is truly going to drive incremental growth for both our retail friends as well as for ourselves," said Mike Haas, VP and Group CIO, Johnson & Johnson. "Certainly the retailers that are the most eager to collaborate are the situations where we have the most opportunity to find those incremental growth opportunities."
Learn more about the Consumer Goods Technology 2005 Conference in the December 2005 issue of CGT.