The Future of Distribution Is Less Distribution" was the theme of a recent speech by Mike Wright, chairman and chief executive officer of Supervalu. At his company, "the '90s will result in less distribution because we will have more technology." To achieve this vision, he said, "a successful buyer needs to have collaborative and cooperative alliances with vendors and brokers."
All Wright's points are true, but for some companies, the truth may hurt if their trading partners are not committed to the underlying driver of Efficient Consumer Response: cooperation.
The original ECR study concluded that the grocery supply chain had about twice as much inventory as necessary. This was in large part due to the supply chain being virtually "unlinked" and replete with adversarial relations between buyers and sellers. It was every company for itself.
Lack of technology was not the issue. There was plenty of it available and ready to go. The problem was underutilization -- technostagnation -- among buyers and sellers who were on a "war footing."
The ECR solution was trading partner cooperation to reduce unnecessary processes and excess inventory. This would not only save a bundle ($30 billion), but also ensure the industry's long-term vitality. The old game of cost-shifting had to come to a screeching halt, it said. And it must not be replaced with cost-sharing. Cost-busting is the new game.
That was more than three years ago, and now the ECR initiative is well under way and widely accepted. So cooperation should be much better across the industry, right?
Wrong! Although improving, real effective trading partner cooperation is still well below what is necessary. Consequently, much needed technological capabilities are either still on the shelf or advancing at painfully slow rates.
Almost everyone agrees that the use of technology will separate winners from losers in all industries over the next decade. The only way for the North American food industry to flourish -- maybe survive -- in the decade ahead is full and unmitigated cooperation between trading partners.
So let's renew the ECR commitment, to reach out and cooperate with trading partners. Listen with an objective, open mind to proposals, even if they are not in line with current policies. Be willing to at least test "extreme" ideas, if they are proposed by an earnest trading partner. Most important, take some risks to improve everyone's future.
J. Mark Harran, a former senior executive with Kraft General Foods, is a consultant based in Apopka, Fla.
