ATLANTA -- Better communication between retailers and suppliers is needed to effectively implement Efficient Consumer Response in frozens, said attendees of the American Frozen Food Institute's Distribution & Logistics Conference here.
Distributors and suppliers said they are trying to streamline operations, enabling them to pass cost savings on to retailers.
"In order to reduce costs, we've got to take cost out of our system," Charlene Roy, senior manager of logistics operations for Campbell Soup Co., Camden, N.J., said after moderating a roundtable discussion. "The theory of ECR is to take cost out of the system. That means there has to be more communication -- all the way down the line."
Continuous product replenishment was described as the "stepping stone" to ECR. However, providing retailers with better service through CRP often inflates labor, transportation, technology and other operational costs, attendees noted.
"There's an efficiency on one end but an inefficiency on another. That's the fight the entire industry is going to have to get together on," one participant said. "The grocery chains and marketers are going to have to get together with the distributors and manufacturers to develop a program."
Many retailers can't accommodate CRP because they lack the necessary freezer storage space, session attendees said. "There's just not enough incentive for them because they don't keep the inventory," Campbell's Roy said.
Some distributors and suppliers said they are shifting from forecast-based to demand-based product replenishment programs. "Inventory is the insurance policy against forecasting, and that's an expensive insurance policy," one session participant said.
To allow distributors to gauge demand, retailers must supply more marketing information -- for example, whether promotions or everyday low pricing is driving demand of a given product, another attendee said.
"You need to get that market-level information brought forward," he explained. "In order to get an effective CRP, you have to get intimate with that customer."