CHICAGO -- Distributors and suppliers who have implemented joint category management programs report an average sales increase of 5% within the category and gross margin increases of 1.2%, according to a progress report on Efficient Consumer Response implementation presented at last week's Food Marketing Institute convention here.
Despite these improvements, however, almost half the respondents from all participating groups said the results were below their initial expectations when they started the project.
The report indicated 50% of
manufacturers and brokers and 44% of wholesalers and retailers said the results from category management were below their expectations, while 20% of manufacturers and brokers and 42% of distributors said the results had met their expectations.
The report was prepared by Kurt Salmon Associates, Atlanta, in late 1994 as the first of a projected annual series of tracking surveys. It included responses from 392 companies in all segments of the industry.
In a press conference here last week, Harvey McCoy, co-chairman of the industry's ECR Operating Committee and vice president of procurement for H-E-B Grocery Co., San Antonio, said 87% of respondents indicated that their organizations were "very" or "somewhat" committed to the initiative, compared with 73% a year ago. The report noted that 8% to 10% of industry volume is being transacted in trading partnerships based on ECR practices. It also said that respondents already participating in category management and continuous replenishment programs plan to double or triple the number of trading partners they work with in ECR alliances over the next 12 months. Other respondents said they plan to move from a planning or testing phase into full implementation during the year.
Among the report's findings:
Continuous replenishment programs have been adopted by over 40% of the industry.
Respondents reported an average reduction of 17% in wholesale warehouse inventories and a 1.9% increase in case volume as warehouse service levels have improved.
Total 1994 investments in ECR implementation, including capital expenditures and one-time investments in education, training and consulting, amounted to $3 billion -- an amount expected to increase 50% to $4.5 billion this year.
Seventy-one percent of brokers and manufacturers responding said their customers are still reluctant to share information with them.
