January 12, 1998 Market Analysis Clock Is Ticking On Year 2000 Compliance American consumer goods manufacturers in 1997 are focusing on using information technology (IT) to help them integrate disparate functions and business processes to increase productivity and infuse greater efficiency into their supply chains. However, a high percentage of companies still find themselves struggling to prepare their systems for the Year 2000 date change, according to a consumer goods technology study conducted by Computer Sciences Corp. (www.csc.com) and Consumer Goods Manufacturer. As the competitive environment in the consumer goods arena intensifies, manufacturers are being challenged to continue seeking ways to squeeze more productivity and costs from their operations. Many have found that the key to such efforts is integration, and that increasingly sophisticated information networks — particularly those involving groupware, local area networks (LANs) and intranets — and enterprise software solutions can play a major role in enabling firms to more closely tie together their research and development, manufacturing, logistics, and sales and marketing processes. "After many years of belt-tightening and cost-cutting, American productivity is the highest it has ever been and continues to outpace the rest of the world's manufacturers dramatically," said Mike Klaus, managing director of CSC's Consumer Goods/Retail consulting practice in Cleveland. "IT, no doubt, is contributing to such stellar results. In particular, connective and streamlining technologies now are taking center stage in companies' efforts to maintain competitive advantage. Also, the alignment and integration of companies' technology strategies with those of the business are helping manufacturers achieve new levels of growth," he said. However, it is apparent in the responses from survey participants that getting a handle on the Year 2000 problem is proving to be a difficult challenge. Only 28% of respondents said they currently are deploying Year 2000-compliant systems, while just 6% are testing such applications. The bulk of the industry is either in the process of renovating legacy systems (33%) or still assessing the problem (31%). "The clock is ticking, and this is the year to finalize a Year 2000 strategy," Klaus noted. "How companies react to this issue in 1997 will go a long way toward determining winners and losers in the new millennium."     Other Highlights Other highlights from the study include the following: Nearly three-quarters of respondents cited "pressure to reduce overall supply chain costs" as one of the most significant market forces facing their companies. "Integrating systems" remains the top information systems (IS) concern, noted by 57% of respondents. IS budgets are fairly strong this year, as 45% of respondents reported an increased budget and 34% expect their budgets to hold steady from 1996. Almost 40% of respondents said they are implementing enterprise-wide systems, up from just 24% in 1996. A near-majority of respondents said their primary reason for investing in IT is to help support the company's growth plans. Document/workflow management, executive information systems, imaging and interactive multimedia are the technologies targeted for adoption within the next three years by the largest percentage of respondents. The activities planned for technology application by the largest percentage of respondents are activity-based costing, collaborative replenishment, promotion planning/measurement, performance measurement and capacity planning. The Internet has taken on increased importance among consumer goods manufacturers as a way of interacting with consumers; those noting the existence of a corporate Web site rose from 33% last year to 62%. However, very few companies are using the Web for electronic commerce. The Manufacturing Report © Copyright 1997, 1998 by Lionheart Publishing, Inc. All rights reserved. E-mail Editorial Dept: tmr-editorial@lionhrtpub.com Lionheart Publishing, Inc. 2555 Cumberland Parkway, Suite 299, Atlanta, GA 30339 USA Phone: 770-431-0867 | Fax: 770-432-696 E-mail: lpi@lionhrtpub.com Web Design by Premier Web Designs E-mail: lionwebmaster@preweb.com