SAN FRANCISCO -- When it comes to working with retailers and wholesalers to bring new efficiencies to the distribution process, the meat industry is far behind other segments of the food industry.
So says Kenneth Wagar, vice president of procurement, inventory management at Spartan Stores, Grand Rapids, Mich., who spoke on the grocery industry's efficiency initiative, Efficient Consumer Response, at the recent annual convention here of the American Meat Institute, Arlington, Va.
"Systems are poor at the retail, wholesale and packer level and they create significant added costs to all. Yet no one in the meat industry has stepped forward to help drive new systems based on consumer pull," said Wagar, who serves on the best practices committee of the Joint Industry Task Force on ECR.
Spartan, a major wholesaler, serves Midwestern independent supermarkets and convenience stores, and had total revenues for the year ended March 26 of $2.19 billion. "A tremendous amount of material has been published regarding ECR over the last 18 months. Yet our view at Spartan is that too many members of the grocery supply system continue to wait and watch rather than move into ECR strategies," he said. "We believe these initiatives are a matter of survival."
Wagar said there is no excuse for packers and processors not to be working with retailers and wholesalers to develop sales, merchandising and cost-cutting strategies.
Except for meat, he said that all departments within Spartan are transmitting 60% of their purchase orders using electronic data interchange, accounting for 72% of all their items ordered. Only 21% of purchase orders in the meat department, representing 29% of meat products ordered, are generated using EDI.
While 60% of Spartan's suppliers have offered to work with the company to develop category management programs, only one meat supplier has offered the same assistance, he said.
Also, Spartan is in the process of developing continuous replenishment systems with suppliers for grocery products and other fresh foods departments. "At this point, no packers have stepped forward to initiate continuous replenishment," he said.
An executive of a leading meat packer who attended Wagar's presentation agreed that the meat industry is lagging behind most other food and grocery suppliers.
"Wagar is right," said the executive. "We are dragging our feet. We've often been slow to change in the meat business. But I see a lot of progress. AMI has been involved in the ECR discussions. I think we'll catch up soon."