With all the talk about Efficient Consumer Response, and the committees, and the studies, and the press, you'd think more people would understand what ECR is! I was amazed, sitting in an ECR session at the Food Marketing Institute convention earlier this month, to hear a president of a large chain ask, "Are ECR and category management the same thing?" The answer, by the way, is "No!" -- but I don't blame that president for not understanding the answer.
The problem is that we keep talking about ECR at a conceptual level, and very rarely talk about the details. I always leave ECR sessions thinking "OK, this is all very interesting, but what do we do now?"
Here's my simplified version of what ECR is all about:
(1) Information is provided directly to manufacturers about specific consumers' purchases, and
(2) Manufacturers ship products directly to each store, based on that information.
Of course, this is theoretical and, in its purest sense, quite impossible. But the thing to focus on is how much money we'd save if we eliminated even some of the paperwork and the sorting and slotting and picking. The Kurt Salmon study on ECR projected $30 billion in savings to the industry with ECR. If we could save even a portion of that, think of the benefits!
Michael Klaus of Cleveland Consulting Associates gave a talk on ECR called "Building Your Own ECR Roadmap: A Common Sense Approach." He identified three critical process areas: product flow, information flow (OK, got those) and category management. I'm not so sure I agree that the last one is completely necessary. Not that category management isn't a great idea (it is), but I think you could go a long way along the road to ECR without it -- by just automating the entire system.
Michael also listed category management as a tool of ECR implementation (I'll go along with that), along with EDI (Electronic Data Interchange), CRP (computerized replenishment programs), partnership (yes, this is very important), flow-through distribution, UCS/DEX for DSD (a standard for direct store delivery systems), and CAO (computer-assisted ordering). Do you think the number of acronyms we use might serve to confuse some people, too?
Terry Poyner from Randall's added computerized receiving, automated accounts payable and cross docking to the list. I think "the list" involves anything that allows you to reduce handling of any sort.
So what do we do now? We automate everything within our systems, and keep a close eye on any and all technology and equipment that will facilitate the new ways to handle products. Make your own roadmap, starting with where your systems are now, and then decide which areas to make efficient first. Then just do one. And then another one. Eventually we'll end up at a point where we're close to the theoretical aspects of ECR, and, we will have saved a substantial amount of money in the overall system.
