Food & CPG Industry Statistics You Are @ Home/ Analyze My Needs/ Food & CPG Industry Statistics Explosive Growth of B2B E-Commerce The market for B2B e-commerce services is exploding. In December 1999, The Boston Consulting Group projected B2B e-commerce would reach $2.8 trillion by 2003. On February 7, 2000, Forrester Research updated their Fall 1999 projection from $2.1 trillion by 2004 to $7.29 trillion by 2004. Food Industry has $23 Billion Invoice Deduction Problem The Food industry has $850 billion in annual sales. Inefficient processing of business documents via paper, mail, fax, and non-integrated proprietary systems results in approximately $23 billion worth of invoice deductions annually, as well as inefficient administrative handling. Companies are searching for solutions to eliminate this expense and improve customer responsiveness. E-Business is Huge Cost Reduction Opportunity for Food & CPG Analysts agree that the Food and Consumer Packaged Goods (CPG) industries are ripe for change in the area of B2B e-commerce and order management. According to key industry analysts, the "single-largest opportunity for food manufacturers will come from B2B e-commerce initiatives." Better methods of communicating order data with suppliers and distributors could yield lower inventory holding costs and procurement costs and could shorten the waits between deliveries. On the wholesale side of the industry, analysts believe distributors will also benefit from e-commerce as they have typically played the role of cost cutters within the supply chain (e.g. acting as inventory managers of manufactured goods). CPG Industry Lacks Concern over Technology Surprisingly, the CPG industry has shown "a lack of concern regarding technology management, change in mindset, the need for collaboration, managing external partners, and company culture as critical challenges to achieving innovation." This was a key finding of a $700,000 research study published in 2000 by Arthur D. Little and The Hale Group for the International Foodservice Manufacturers Association (IFMA). As the industry realizes the potential benefits of technology and process improvement, adoption of B2B e-commerce and order management services could happen quickly. Cost Savings Equal Profits The Food and CPG industries are highly competitive mature markets that have been flat in the last few years with growth transitioning from Retail to Foodservice. Profit margins for retailers can be as low as 1%. Therefore, cost savings can have a significant effect on profitability. With competition so intense, companies often implement cost-reduction strategies to enhance their bottom line.