I was impressed with the first industrywide Efficient Consumer Response Conference held Jan. 19 and 20 in Dallas. The original target attendance number was 800, and we ended up with 1,600-plus. The conference did a good job of overviewing all the aspects of ECR.
Kurt Salmon & Associates released a progress report on ECR implementation in the industry. The net of this study was: "The commitment to ECR is universal and strong. Investments made in 1994 were $3 billion, with $4.5 billion projected for 1995. Tangible results are being achieved. Major changes are still underway." One interesting result they shared is that the sales function has now become the major ECR champion. In the early days, sales was threatened by ECR. KSA also said there's a difference in the key performance measures for manufacturers and brokers. These measures are currently return on sales, shipments per period, cash flow, return on assets and market share. In the future those measures will be customer profitability, customer satisfaction, products profitability and inventory turns. The main thing this conference did is put an umbrella over a lot of specific areas, so we can now tell what exactly is included in ECR. It includes value chain analysis, category management, electronic data interchange, managing large-scale organizational change, activity-based costing, logistics, continuous replenishment, direct store delivery effectiveness, transportation, cross-docking, ECR data requirements, information and information-based services.
Andersen Consulting described EDI, or electronic data interchange, as "the fundamental ECR enabler delivering the most immediate and recognizable benefits." These benefits include reduced administrative costs; reduced lead time for ordering, shipping and payment; more accurate processing of business transactions; greater warehouse efficiencies, and more productive merchandising and store management. Andersen also covered questions about structuring an ECR partnership agreement. The following questions have to be asked: What are the overall objectives? Who has primary responsibility in each company? How will success be measured? At what point? How will performance/status be communicated? What are the objectives/responsibilities in specific areas (e.g. EDI, etc.) How often will the leaders meet to discuss results and fine-tune the strategy? Some interesting comments heard at the conference:
"If you're not started in ECR, you need to be soon. The best of your competitors will be there." (True).
"The landscape is littered with the remains of those who noticed too late -- or not at all -- that their world had changed." (True, too).