SURVEY REVEALS PROGRESS IN ECR -- AND ROOM TO IMPROVE

ADAM BLAIR

ATLANTA -- A new survey, which asked supermarket industry companies to rate their own progress in implementing Efficient Consumer Response initiatives, indicates ECR has definitely taken root in the supermarket industry, though there is still significant room for growth.

Respondents, who included retailers, wholesalers and manufacturers, assessed their implementation level for 20 ECR programs on a scale ranging from zero -- no activity -- to four -- an implemented program with measurable benefits. Ratings of three or higher indicated a "mature" program. For ECR programs conducted with a majority of a company's trading partners, 34% of respondents were at a mature level.

For leading-edge programs, those being done as pilots or with only a few select trading partners, respondents reached a 69% maturity level. Respondents predict their ECR programs will be at a 94% maturity level in three years' time.

The 78 respondents to the benchmarking survey represent nearly 60% of all grocery volume, according to Gary Capshaw, vice president of logistics at Fleming Cos., Oklahoma City, and co-chair of the ECR Operating Committee.

Capshaw and Operating Committee co-chair Mike Maurer, director of industry affairs at Procter & Gamble, Cincinnati, shared preliminary survey results with SN prior to the complete report's presentation at the Fourth Annual ECR Conference, to be held here March 18 to 20.

As a group, manufacturers ranked higher on the "maturity index" than distributors, both for their typical activities -- those conducted with the majority of trading partners -- and their best practices. Manufacturers' "typical" maturity level was 36%, compared with distributors' 30%; the best practices levels were 71% vs. 55%.

Both groups, however, predicted they would be at a 95% maturity level within three years.

Among individual processes, some of the high scorers in typical use included purchase orders and invoices through electronic data interchange, at 85% and 73%, respectively. In the area of category management, 50% of all respondents have set up a business process to conduct it.

Some of the lower-scoring areas included activity-based costing, with only 13% of respondents at a mature level for typical activity, and the use of advance ship notice transaction sets, at 16%.

"The implementation of some of the processes requiring technology is somewhat behind the organizational changes," said Capshaw. "Invoices and purchase orders, for example, are relatively cheap processes to implement, but activity-based costing requires the use of data warehousing and a technology investment."

The survey indicated two "large gaps" in technology that helps enable ECR, said Capshaw. One is in the area of efficient receiving, including ASNs, pallet and case labels and receiving optimization. Another is related to item maintenance within the Uniform Communications Standard II transaction sets.

The Operating Committee plans to use the survey results to help set its technology priorities, according to Maurer.

"We want to provide the industry with the tools to make the changes that are right for their businesses," he said. "Looking at this data, we can ask whether the tools exist that allow a company to adopt a practice. Or maybe they exist but they may be too expensive for most companies to use."

Capshaw and Maurer identified several other accomplishments from 1997. A survey on EDI will be published at the upcoming conference, and the operating committee will provide a preview of a profit-and-loss "calculator" developed in concert with Milton Merl & Associates, New York.

"The calculator will provide a simulated model, so that a company could say 'Here are my costs. If I did one of these ECR practices, what results could I expect to see and where?' " said Maurer.