Technology is increasingly fundamental to competitive advantage in the consumer-packaged-goods industry. IT leaders are stepping up to the challenge.

– Article from McKinsey.com

Consumer-packaged-goods (CPG) companies have traditionally viewed technology as a necessary business expense to be managed in the most efficient way possible. As IT spending increased over the past two decades, managers concentrated on standardizing IT systems across the company and reducing costs. Technology programs delivered on consolidating and integrating systems following mergers and acquisitions. Productivity flowed from improved supply-chain processes and from warehouse and plant-floor automation. But growing and differentiating the business through IT-enabled innovation was not a top priority for leadership teams.

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However, during the past few years, CPG companies have grasped the commercial potential of the burgeoning supply of information about customers’ behaviors, needs, and wants. The volume of data emanating from point of sale, in-store engagement, mobile platforms, and social media is exploding and unleashing value from technology in ways that go beyond operational efficiency. This is leading to a fundamental change in what businesses expect from technology. Senior executives across all functions now realize that IT is capable of game-changing innovation and business transformation that can spur revenue growth, get products to market faster, and sometimes generate entirely new business models.
As information intensity grows, world-class IT in CPG companies requires more than just cost-effective service provision. Companies seeking to seize the commercial potential of technology will need to invest in key areas to keep pace not just with their competition but also with the expectations of their retail customers and information-savvy consumers. The possibilities created by technology should spark innovation in business processes and product offerings, and data-driven insights should help shape business strategies.

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