As a sweeping industry initiative to rally around, Efficient Consumer Response has passed its prime. But the underlying concept of ECR continues to serve as a springboard for distributors continuously seeking methods to streamline processes and strip costs out of their operational systems.
Industry experts agree that ECR has paved the way for a wide range of programs designed to enhance efficiencies and bolster collaborative efforts between retailers, wholesalers and manufacturers barely deemed imaginable at ECR's inception seven years ago.
While ECR as a stand-alone initiative may be dead, the projects launched under that umbrella will live on as the industry changes to compete in the age of the Internet. Sweeping industry initiatives today must have a decidedly e-commerce flair. Communicating in real time over the Internet and gaining access to precise information and interpretation are the names of the game today. While the landscape has changed dramatically, however, the underlying lessons learned during the ECR era continue to hold value.
"Skeptics say that ECR hasn't delivered on its promises," said Joe Andraski, senior vice president of retail development at OMI International, Schaumburg, Ill. "But it has, and in large measure."
Of primary importance, ECR was used as a structure for getting retailers and manufacturers on the technology learning curve. ECR has proven to be a means for companies in the supermarket industry to use technology to conduct business, from category management to replenishment. Leading companies today have business practices in place that derived from ECR test programs, experts agree.
"ECR has accomplished a lot of good," said Michael Sansolo, senior vice president of the Food Marketing Institute, Washington. "Think about the supply chain. We now have interconnected technologies and have become as seamless as possible. The philosophies of ECR have become ingrained in the industry. That is perhaps the best legacy of the initiative. We have taken the leadership and learning associated with ECR and applied it to new technologies. ECR has made us better prepared for the new environment of the Internet."
The supermarket industry has gone through mountains of change -- waves of mergers and acquisitions, new technologies and Y2K. ECR has served as a prominent fixture in the decisions that executives have made with regard to allocating resources.
"Because of the basics learned with ECR, retailers and manufacturers can now identify what activities have inefficiencies or have no added value to consumers," said Sansolo. "Wasted communication doesn't let us get the biggest bang for the buck, and we have stopped doing things that are inefficient."
"ECR is now heading to a company-level system rather than as an industry-wide initiative," said Lisa McCue, manager of industry communications for the Grocery Manufacturers of America, Washington.
"ECR has paved the way for improved relationships and identified technological pathways," said Andraski. "Opportunities have been realized. It's encouraging to see the enthusiasm in companies that are making technologically based decisions."
Collaboration with trading partners has been held up as the biggest boon to the industry that ECR has realized. "If one thing can be attributed to ECR, it is emphasizing the importance of communications," said Sansolo. "Not everything has been solved, and there are still areas of questions, but a lot of learning has been shared and that learning will move with us into the future. ECR has opened up ways to look at projects to do together," said Sansolo.
"It is essential to exchange information to allow retailers and manufacturers to sell more stuff," said Andraski. As a result, Collaborative Planning, Forecasting and Replenishment is one outgrowth of ECR that is being put to work to contain costs and make significant gains.
"It is critical that all systems are looped together," said Andraski. "Using CPFR, up-front partners are able to establish a plan, use forecasting tools and operate under collaborative planning."
Emerging systems are also surfacing that are firmly rooted in ECR basics. Pay-on-scan or scan-based trading is one model being employed by retailers seeking to free up cash flow. Using scan-based trading, retailers pay manufacturers as goods are scanned at the front end. Industry experts agree that there is a desire to move to scan-based trading and look for this area to grow.
The work is not complete, however.
"Until we have a system without inefficiencies we still have things to work on," said Sansolo. "How we grapple with e-commerce, how we build systems, all will take continuous improvement. How to make things better and the business processes easier are always ahead of us."
"We have to find ways to get a lot more efficient in materials handling," said Andraski. "Fuel costs are rising, plus there are driver shortages and warehousing costs that all impact efficiencies."
Freight consolidation is one avenue retailers are examining as a means to remove costs, as are crossdocking opportunities. Putting buying systems under the microscope is another. For example, operators are questioning the rounding-up system as being a catalyst for producing artificially high inventories.
This year's ECR conference will reportedly be the last to be held as a separate event. The FMI and GMA have formed a joint committee to explore global issues surrounding e-commerce and have wrapped ECR into a joint e-Business Summit Conference that was launched last year. This year's conference will be held June 25 to 27 in Chicago.
"We need to look at e-commerce as a tool to speed up logistics, communicate in real time, lower costs and connect with consumers," said McCue. "We will look at how to utilize technology to continue to streamline business and how technology can be used to grow the business."
The Uniform Code Council, Dayton, Ohio, has taken a leading role in examining an industrywide extranet, setting standards from which all applications can be built. "When you're dealing with emerging technology you don't want to invest in all possible avenues," said Sansolo. "It is hoped to create a central system of standards." Sansolo expects materials to be developed by this July.
Another central system is in the works with the FMI's current project with viaLink, which will enable an exchange of information pertaining to promotions using extranet technology. "This sort of program should reduce mistakes," said Sansolo. "Ordering, length of time a particular promotion is running, general details all will be streamlined," he said.