Survey: Consumer-Packaged Goods Industry Cuts IT Spending Rate 2

Known for its fiscal conservatism when it comes to information technology, the consumer-packaged goods industry's IT spending last year dropped to one of its lowest points in recent history. The industry spent 1.42% of its net sales revenue on IT, down from 1.56% in 2002 and well below the 1999 peak of 1.62% of sales.

But the good news for IT: Companies drastically boosted their capital IT investments in 2003, according to a report released Tuesday by the Grocery Manufacturers of America. The study, unveiled at the GMA's annual conference in La Jolla, Calif., says capital spending on IT rose to 0.82% of sales in 2003, up from 0.41% in 2002, and is projected to grow to 0.86% in 2004.

High on consumer-packaged goods companies' list of IT priorities for 2004 are investments in trade promotions and supply-chain planning, as well as manufacturing, distribution, and transportation initiatives.

Mandates from Albertsons, Metro Group, Wal-Mart Stores, and the Department of Defense have put the pressure on consumer-packaged goods companies to investigate and implement radio-frequency identification technologies. According to the study, 64% report that they are in the information-gathering stage with RFID, while 38% are designing RFID programs, and 19% are actively testing RFID. Also, 5% report they are piloting RFID with customers, while 2% are implementing RFID.

Conducted by Computer Sciences Corp. and called the "Grocery Manufacturers of America Information Technology Investment and Effectiveness Study: The State of the Industry 2004," the study is based on responses from 93 company executives representing 63 of the 119 GMA member companies and on quantitative and detailed surveys from 42 companies.