CHICAGO -- There's yet another phrase associated with successful Efficient Consumer Response, and it is probably one of the most important.
To make Efficient Consumer Response work, retailers and manufacturers must seek "continuous improvement" in their operations, Jonathan Wolfe, president and chief operating officer of Oshawa Group, Etobicoke, Ontario. Wolfe spoke during Speaks presentation at the Food Marketing Institute convention here. "ECR forces companies to stop and reflect on the way they do business," Wolfe told the Speaks audience.
"If you look at all the components of ECR, they all go together, true. But each one of them can be done separately. To make ECR work, each business must be involved in ongoing analysis of its methods and practices. "That boils down to continuous improvement -- a rather new concept for our industry but one we'd better learn if we are to succeed in the future. None of us will achieve significant results if we attempt shortcuts. ECR is a long-term exercise." Wolfe was introduced by Michael Sansolo, FMI group vice president of education and industry relations, who told the Speaks session the food industry expects to spend $4.5 billion on ECR initiatives this year, compared with $3 billion in 1994. He also said the industry is implementing ECR at a much faster rate than had been expected when ECR was introduced to the industry two years ago. According to Sansolo, an industrywide survey found that 72% of companies are involved to some degree with ECR, including 42% that are implementing ECR programs and 30% that are in the testing and planning stages. Self-distributing chains are moving the fastest overall, especially in the areas of continuous replenishment and category management, Sansolo added. According to Wolfe, category management is the key to ECR because "it is enabling us to manage our margins in a way that was never achievable before. "It has led us to see things differently. Many retailers viewed scanning accuracy as something you left for your techies to worry about. When you commit yourself to category management, the world changes. "Scanning accuracy takes on a new importance which we never appreciated before. Without scanning accuracy, category managers cannot do their jobs." Oshawa uses scanned data to retrieve sales information by customer, Wolfe said, "and the amount of information is huge and almost impossible to analyze. "However, Oshawa is developing software that will enable us, by the end of this year, to consolidate all that information and analyze market-basket data." Wolfe said ECR requires "the
absolute commitment of and the unwavering leadership from senior management of a company. The second prerequisite: strong partnerships with trading partners." ECR has many parts, and companies can do one or several. But "no matter which you select, or how big or small that project is, you must have the firm commitment and involvement of top management. "ECR doesn't operate in a vacuum. It is about the supply chain -- your link in that interconnected series of circles that flow from fields and factories to consumers' homes." Wolfe added that no company is too small to get on the ECR bandwagon. To illustrate that point, Sansolo introduced a video report featuring Marv Imus, owner of Paw Paw Shopping Center, Paw Paw, Mich., and Pat Quinn, president and chief executive officer of Paw Paw's wholesaler, Spartan Stores, Grand Rapids, Mich. Imus said his decision to get involved with ECR technology prompted him to develop a partnership with Spartan, which in turn develops partnerships with manufacturers. Since investing in ECR systems, Imus said he's been able to use the technology at hand to monitor direct store deliveries, pricing and inventory. According to Quinn, "It takes a great openness with the retailer to share information and to say we really are in this together. "For the wholesale supply segment and the retailers they support, it is very critical that the wholesaler leads the charge and initiates the action. He must understand what's required and how he can help bring the pieces together and implement that with the retailer." According to Quinn, a key element of Spartan's re-engineering program is that it seeks the same things from manufacturers that it seeks from its retail members. "For the last eight months we've met with 23 or 24 manufacturers in half-day meetings to discuss where we are and where they are in the ECR process," Quinn explained. "We interpret the retail side of the equation for them and they interpret the manufacturing side for us so that together we can convey that information back and forth and understand what our role will be as the element in between the retailer and supplier side."
