BOCA RATON, Fla. -- The Efficient Consumer Response initiative kicked into higher gear last week as industry leaders gathered here to begin sharing pilot results and making how-to-implement recommendations.
On topics ranging from category management to cross-docking to direct store delivery, executives stressed that research efforts and pilots are confirming that ECR represents the right course for the industry now. The forum for these discussions was FMI's Midwinter Executive Conference. One year ago ECR was launched at that event with the promise of saving the industry some $30 billion. But this year -- in speeches and the release of studies -- ECR was being shaped.
"We are beyond the theory of the hypothesis of what ECR is all about," said Donald Dufek, a co-chairman of the ECR Best Practice Operating Committee and senior vice president of logistics at Kroger Co., Cincinnati. "A clear sense of direction on how to
get started flows from each element."
Among the key activities that took place:
Industry leaders outlined some best practices and quantified potential savings. In one example under the direct-store-delivery heading, it was found that a 100-store chain adopting night deliveries stands to save $60,000 to $65,000 a year. In another case, a subcommittee found companies implementing cross-docking were able to reduce merchandise handling costs by up to one-third.
Executives began addressing the topic of how to implement ECR. Accordingly, one report told the industry to step up planning, use cross-functional work teams and make certain that the chief executive officer or top-level executives are committed to the projects.
ECR organizers said they are pressing forward with pilots and research with the goal of completing a catalog of best practices by the end of 1994. Attendees at the midwinter conference heard reports from each of the ECR Best Practices subcommittees, which presented findings and outlined what their next steps will be.
In some cases the next steps won't be piloting. For instance, the Continuous Replenishment Subcommittee is forgoing pilots in favor of documenting the industry's already impressive advances in this area. Interviews with 30 companies showed firms increasing turns from 12 to 65 and decreasing lead times for orders up to 50%.
Category management was called "the steering wheel" for ECR best practices in a report by the subcommittee geared to that effort. "The momentum toward full implementation is evident and building," stated the report, which outlined six interrelated components for best practices. "We believe that taking a passive wait-and-see position on category management is not a good strategic decision."
Electronic data interchange was called a "prerequisite to almost all other ECR activities" in a speech by Skip Smith, co-chairman of the Integrated EDI subcommittee and vice president of information services for Supervalu, Minneapolis. The committee's best-practice recommendations focused on the purchase order-to-payment cycle, eight Uniform Communications Standard transactions that are the most widely used.
