ATLANTA -- Some of the most far-reaching trends in the supermarket industry, including consolidation and the growth of home shopping, could provide new power to the Efficient Consumer Response initiative, according to four leading players.
"The ECR initiative was a way to get the industry to wake up and realize our economics are changing, and we needed to change the way we do business," said Michael Heschel, executive vice president of information systems and operations for Kroger Co., Cincinnati. One area influencing the changing economics of the industry is consolidation. A key issue among companies affected by consolidation is the need to drive their operating costs down even further to compete, according to Heschel.
"We at Kroger believe in consolidation, especially with our recent announcement of our merger with Fred Meyer," he said. "As our economics continue to change, I see consolidation making ECR move faster throughout our industry.
"Companies are trying to achieve more critical mass, more synergies, and they want to be able to do more things on their own with key suppliers, while making more of an impact on the industry," he added.
Heschel was joined by Jack Haedicke, senior vice president of C&S Wholesale Grocers, Brattleboro, Vt.; John Iselin, president of United States bakery operations for Earthgrains, St. Louis, and Gary Snyder, vice president of logistics for Acosta-PMI Sales Co., a third-party logistics company based in Jacksonville, Fla., on a panel that discussed "Operationalizing ECR," at the ECR Conference here Feb. 8-10.
One of the most explosive breakthroughs that is keeping the industry on its toes is the advent of the Internet. While the medium is being used for both consumer and business-to-business applications, industry executives are still evaluating how ECR will play a role in the future success of these applications.
"The Internet will have a huge impact on e-commerce, especially when dealing with inventory, and how we buy it, ship it, store it and deliver it," Haedicke said. "The Holy Grail of logistics is zero inventory, with instant availability. When we realize the goals we are working toward, including inventory reductions and increased turns, this is the mechanism that will get us there."
Further, the Internet is expected to make leaps in business-to-business communications, especially in the area of collaboration between trading partners.
"The industry has benefited from ECR in the push of the electronic data interchange movement," Heschel explained. "Now the Internet will add standards to lessons learned from EDI, and enable information to be shared back and forth. Key trading partners can plan promotions and forecasts, and quickly, jointly agree, from anywhere in the world. It will be a tremendous advantage."
Industry members are in the process of piloting an Internet- and standards-based secure pipeline with the Uniform Code Council, Dayton, Ohio, called UCC Net.
"This secure pipeline will process data and give access to all trading partners who want to run their business more efficiently. In the old business model, information was power," said Earthgrains' Iselin.
