Insights -- December 2005
Mid-market enterprises in general are driven by two main concerns: growing revenues and decreasing costs; in other words, profitable growth. Mid-market consumer goods companies, like their peers in other like-sized businesses, see revenue growth as their chief driver -- 86 percent of the CPG respondents in Aberdeen report "ERP in the Middle Market Enterprise: The 2005 Benchmark Report" identified growing revenue as the top of their agenda. Mid-market firms are less concerned with decreasing operating costs then their peers in other industries, but much more concerned about the commoditization of their products.
A Change In Tech Strategy
Consumer product manufacturers aren't satisfied with their technology status quo and indicate changes ahead in their strategies addressing their infrastructure. Of foremost interest is the move to an integrated ERP suite and consolidating what may be a plethora of fragmented solutions (see this month's cover story on Tasty Baking for further details) across the enterprise. Unlike the aggregate of responders, CPG companies used the initial cost of the solution and the ongoing cost to support and maintain the solution as their main determinant of successful technology. Other mid-market companies also saw ongoing support and maintenance as key, but stated that user satisfaction with the solution and the ability to foresee problems before they occur as their measures for technology success.
Close to half the respondents indicated plans to purchase procurement and supplier relationship management applications in the next year. Another area where changes are likely in the next 12 months is in the financial software (see chart) used by the CPG companies. While 37 percent expect no change in the next year and 15 percent will upgrade their existing software, 48 percent indicated intent to change their financial applications -- 16 percent with a standalone solution, 32 percent with an integrated suite solution.
The greatest influences that pressured these respondents included pressure to become more agile and responsive to a changing business environment, to better manage and service customers, improve customer retention, and create an aggressive plan for future viability and successful growth. These pressures were selected by 62 percent of CPG respondents as wielding "a lot of influence" on the company's ability to successfully manage its workforce.
Feeling the Pressure
The study also revealed industry "pressure points". For instance, 57 percent of respondents felt the need to beef up current business capabilities to become more competitive as a top influence while 29 percent cited pressure to reduce operating costs. Only 10 percent thought that confronting globalization was a top influence on their ability to manage their workforce. While the pressure to reduce operating costs and issues of globalization exerted less influence on CPG companies than the aggregate, CPG companies were, not surprisingly, more focused on business viability, agility, maintaining a competitive stance and overall management.
WHAT'S IN STORE
New Developments ringing up at retail
Gift Cards transform Holiday Shopping
Gift cards are changing both gift-getting and giving, according to a recent American Express Gift Card survey. Virtually all those surveyed (92 percent) agree that gift cards have altered how they shop. Gift card purchasers say that they expect to visit fewer stores (62 percent), purchase less actual merchandise as gifts (60 percent) and shop more online (28 percent). In addition, they plan to finish shopping faster and with less stress (74 percent). Two-thirds of shoppers (66 percent) say gift cards have made them think differently about gift giving -- that the gift is "what the receiver gets for him or herself." Recipients shopping with their gift cards will shift retail spending later in the cycle, extending the peak shopping season past traditional year-end holidays and providing incremental sales opportunities to retailers. Gift cards maintain a strong ranking as No. 4 on the list of items consumers surveyed plan to give, just after the perennial favorites of clothing (68 percent), toys and games (63 percent) and music in all forms (62 percent). The American Express Giftcard can be redeemed at U.S. retailers and restaurants that accept the card.
Retailers Endorse GDSN
On November 14, Albertsons, Associated Food Stores, Associated Wholesale Grocers, SUPERVALU, Unified Western Grocers, Wal-Mart and Wegmans Food Markets officially endorsed the Global Data Synchronization Network (GDSN) and requested that suppliers also use the GDSN when synchronizing their data. As a global, internet-based initiative, GDSN aims to allow retailers and suppliers to efficiently exchange supply chain data that is accurate and compliant with universally supported EAN.UCC System standards. Retailers and suppliers are currently synchronizing data within the GDSN utilizing the GS1 Global Registry. After a few weeks, trading partners experience efficiencies and savings by reducing time spent on data maintenance and order processing. The GDSN vision is based on a centralized GS1 Global Registry that connects to numerous interoperable data pools around the world. This enables standard data to be synchronized between trading partners on a near real time basis. The network allows for one single point of entry so that trading partners only need to join one certified data pool, anywhere in the world, to communicate with any other trading partner in the GDSN.
From the Pages of RIS News
The retail landscape is littered with the rubble of competitors who thought they could beat Best Buy at the consumer electronics game. Competitors have come and gone, while Best Buy just keeps dazzling consumers and Wall Street by delivering an outstanding shopping experience and stellar financial performance. To read this story in its entirety, in addition to catching up on the latest retail trends, please visit RIS News, www.risnews.com.