A FAIR SHARE IN ECR

ELLIOT ZWIEBACH

ATLANTA -- The industry's efforts to increase efficiencies shouldn't eclipse the goal of achieving equitable access to products and terms for all trading partners.

That's the view of Thomas K. Zaucha, president of the National Grocers Association, which is pushing for both goals as the industry moves forward with Efficient Consumer Response. "We're seeking a system that's not only more efficient but one that's also more equitable," Zaucha said.

"Unless retailers, wholesalers and manufacturers can come to cloture about fairness and equity, we will be hard-pressed to make the changes necessary to develop a more efficient distribution system."

Zaucha, interviewed prior to the opening of NGA's annual convention here, also warned about a surge in regulatory aggressiveness and outlined some of the association's additional programs for the trade.

But Zaucha put particular emphasis on the fairness problem. Fairness issues include giving all retailers, regardless of class of trade, identical access to all products and packaging, payment terms, pricing, distribution systems, warehousing, cost of inventory and promotional allowances. Those issues were raised by NGA members two years ago in relation to alternative formats, shortly after the Grocery Manufacturers of America issued general guidelines on equitable treatment of all industry segments. "And they have as much relevance today as they did then," Zaucha pointed out.

Asked whether NGA has encountered resistance from any industry elements in pursuing the fairness portion of the ECR equation, Zaucha replied, "The issue is still on the table, as it should be.

"There are a lot of partnerships going on, and as those pilot efforts produce results favorable to both parties, they're able to deal with both efficiency and equity, the two parts of the puzzle.

"But when both sides are not forthright in their partnership, the results have been mixed," Zaucha said.

Four major workshops at the NGA convention will be devoted to ECR, Zaucha noted. Their focus, respectively, will be the basics of ECR, its technological aspects, replenishment and category management, and promotions.

When ECR was first discussed a year ago, Zaucha told SN, there was a lot of anxiety among the independent and wholesale sectors about whether they would be fully included in the process.

"So NGA moved aggressively to fill that void with the formation of the wholesaler-independent retailer task force to ensure that independents and their wholesalers are full players in the ECR process," he explained.

"One of NGA's missions is to create a road map for independent operators to enable them to gain benefits from ECR, and the task force and the workshops are part of that mission," Zaucha said.

A study by Arthur D. Little Co., which was completed 60 days ago, established "best practice" models for ECR partnerships, Zaucha said. That study, initially presented during a session on efficient communications at last month's Food Marketing Institute Midwinter Executive Conference, will be discussed during an NGA workshop this week.

Turning to other areas of concern, Zaucha said it is clear that both government regulators and labor unions are becoming more active, "and NGA is uniquely positioned to assist the industry and its membership to deal with such actions because we've developed a very effective grassroots network in the last 11 years in terms of our ability to generate responses from grocers in communities throughout the 50 states."

During the 12 years that Republicans controlled the White House, the emphasis at the federal level was on less government and more private-sector initiatives and a greater amount of volunteerism, Zaucha noted.

"But government regulators now feel they have a new mission and are freer to impose more stringent regulations. And with more severe budget restrictions, people must justify their reasons for being, which results in a higher level of citations and fines.

"Retailers tell us their greatest frustration is that each time they develop a more efficient system, they encounter new government regulations or greater cost burdens."

Related to government initiatives, Zaucha said, are efforts by organized labor to reform the Occupational Safety and Health Administration to create higher penalties and impose greater culpability among employers and to pass strike replacement legislation and mandated health care benefits.

Health care reform is the most important issue the industry faces, Zaucha said, and it's one issue that has split the industry.

"Large companies whose retirees are protected with very costly health care benefits are more responsive to supporting the Clinton administration's mandatory approach to health care reform because it could relieve them of a heavy economic burden," Zaucha explained.

"But most other companies in the industry take a position that's 180 degrees different, especially most of NGA's constituency, which supports reforms with more of a free-market approach."

One of the alternative reform proposals to the administration's plan, Zaucha noted, is the Cooper-Grandy bill, "which expands coverage and accessibility in a way that preserves a more free-market concept.

"You're looking at big bucks here, with one segment more proactive in supporting the president's proposal. But we will represent the majority of the industry in looking at a more modified free-market approach," he said.

In an effort to increase NGA's operational services, the association established the Grocers Research and Education Foundation last fall. GREF's start-up costs were absorbed by NGA, but Zaucha said the foundation ultimately will be fully funded by grants and donations.

GREF expects to operate at least 12 "centers" -- a series of separate operational service programs dealing with family-owned businesses, human resources and career development, labor relations and employment law, marketing excellence, regulatory compliance, wholesale efficiencies, retail efficiencies, retail-owned development, trade relations, applied technology and futurist studies.

As the number of centers grows, no association or company will be excluded from involvement, Zaucha explained, "because that would be contradictory to the vision and intent we have for the foundation as a consortium or national clearinghouse for all that's available in the industry today.

"The programs will be for the use and benefit of everyone, though our prime motivation will always be to make sure independent operators and wholesalers are on the cutting edge and are the full beneficiaries."

Three of the centers are already in operation: the Center for Marketing Excellence, which integrated existing merchandising and advertising services seven years ago; the 4-year-old Center for Family-Owned Businesses, designed to extend family ownership into subsequent generations, and the Center for Career Development, which late last year received its first grant -- $218,650 from the U.S. Department of Education. "What the career center will do," Zaucha explained, "is develop national standards of competency for entry-level positions in the supermarket industry by defining those positions and the skills and training necessary to perform them; developing a course of training to teach those skills, and developing a system of testing to determine levels of competence."

The members of the career development center's oversight council will hold their first meeting here at the convention to begin the three- or four-year process of developing the center's programs, Zaucha pointed out. Those programs and materials are expected to be incorporated into existing training programs nationally, he said.

A fourth center -- the Center for Labor Relations and Employment Law -- will be unveiled during back-to-back workshops at the convention. The center will develop separate share groups for unionized and nonunionized companies and provide legal advice and assistance, as well as serve as a medium for open discussion of labor and employee relations services.

"This new service will provide an early warning system to help our membership hold the line against unwarranted and unfair government intervention," Zaucha explained.

He said he isn't sure which center will be developed next. "It literally depends on which gets funding first," he said, "As we find benefactors and supporters, we will attempt to make each center operational."