AN AMBITIOUS AGENDA FOR ECR

MARC MILLSTEIN

CHICAGO -- If the Efficient Consumer Response operating committee has its way, 1996 is going to be a very busy year.

On tap for ECR this year:

Turning the industry's formidable attention to new bodies of work, especially those that will directly impact consumers, such as efficient product introduction, efficient store handling and "foods solution selling."

Expanding the scope of the process improvement groups in the areas of continuous replenishment, activity-based costing, category management and electronic data interchange.

Wrapping up unfinished business, including releasing the long-awaited document on efficient product assortment and the report on efficient promotion.

Those are the key areas and direction of work the industry's ECR initiative is expected to focus on in the coming year, said Jack Haedicke, vice president of activity-based costing at Kraft Foods, Northlake, Ill., and a co-chairman of the Joint Industry ECR Operating Committee.

Haedicke spoke with SN shortly before the second-annual Joint Industry Conference on ECR, which begins here Wednesday and continues through Friday.

In the area of new work, Haedicke pointed to several initiatives designed to help focus ECR more on the consumer. In that respect, one of the most important projects involves efficient product introductions, he said.

The ECR initiative thus far has bypassed this difficult issue, but that should soon change if the operating committee's recommendations are followed. Haedicke stressed that the group's work proposals still had to be approved by the ECR Executive Committee.

"Our work in this area will involve purifying the data. There's a lot of bad data out there on the success of new products. If we're trying to lean more toward demand-side issues and bring the 'C' back into ECR, this is a very important issue to get straight," Haedicke said.

"The data that I keep hearing quoted is there were 20,000 new-product introductions last year, out of which 100 survive a year. That's garbage. I'd like to know where that figure came from, because if we had that sort of track record at Kraft Foods, we'd be out of business," he said.

Another critical new area of focus will be efficient store handling, which involves stocking the shelves and presenting product in the store.

This area represents "the largest single controllable expense for retailers -- and it is almost all labor. It can run anywhere from 4% to 8% of sales. We'll be looking at elements such as shelf-ready packaging, shelf space utilization and racking," he said.

The last new proposed area of ECR emphasis is food solutions selling. "What we're looking to do is create a more pleasant shopping experience for consumers that is solutions-oriented," Haedicke said.

"The example I like to use is the baby care solution at [H.E. Butt Grocery Co., San Antonio], where diapers, pins, wipes, baby food and anything else for an infant or young child are displayed together in a single area. Consumers get the convenience and the price benefits of shopping in a supermarket," he said.

Other similar selling categories might involve sandwich solutions, breakfast solutions and many others, Haedicke said. "I'm not going to say what they should be, but major opportunities exist."

In other areas, Haedicke said Kurt Salmon Associates would continue to conduct its annual industrywide ECR update report for at least one more year. "That's real important. It's our benchmark."

He said the document on efficient promotion now being prepared by Andersen Consulting is scheduled for release in May.

Regarding the ECR share groups, or process improvement groups, Haedicke said EDI is the only group fully up and running, but that the continuous replenishment program, activity-based costing and category management groups have met or will soon be meeting.

"These are going to be small, very focused groups, not to exceed 12 members, and include people from companies that are the best of their class in each of these areas," he said.