TESTS INDICATE BROKERS HAVE ROLE IN CRP

JAMES TENSER

CHICAGO -- In pilots with several brand marketers and retailers, a West Coast firm is demonstrating how brokers can enhance merchandising and promotion results by leveraging capabilities across multiple manufacturers.

"The challenge to brokers for the next 10 years is to be value-added," Robert Raynesford, president and chief operating officer of Carey, Ahrens & Raynesford, a San Ramon, Calif., food brokerage firm, told a Food Marketing Institute convention audience here.

With many direct manufacturers now developing proprietary continuous replenishment pilots, retailers can be faced with daunting complexity, he said. "If you are a retailer going to CRP, one of the great challenges for your buying staff is every time they make a change, they are facing a new system."

He added, "We explored, from a broker perspective, what could we do as a third party to get involved in opening and expanding the system?

"We saw ourselves being able to take a number of principals through one system much, much quicker than if they were taken through one at a time."

Retailers are commonly moving into CRP by working with their top-20 direct manufacturers, Raynesford said. Employing technical capabilities it has been learning and developing over eight years, CA&R began testing with Lucky Stores, one of the broker's primary retail clients in southern California.

During the first year, only two manufacturers went live on the CRP system, three "sort of patched it together" and seven actually pulled out of the process, he said.

One of the more successful parts of CA&R's pilot effort at Lucky yielded good business results for Dole's refrigerated juice line, said Raynesford, who outlined results of an 8-month-old CRP effort.

With its high turn, the chilled

juice category faces space-management issues and service-level issues, he said. Through the program, Dole and Lucky have achieved better inventory management through daily buying as well as better execution of marketing plans.

Among other achievements, the program cut total system inventory levels from 1.4 weeks to less than one week, while increasing turns up to about 50 times per year. At the same time, service levels rose from 97% to 99%, and spoils were reduced to 0.5%.

The result was a 20.5% consumption lift in the first eight months of the project, he added.

Raynesford predicted that as much as two-thirds of his retail or wholesaler base will be on CRP by next year with help from his firm. He cited the following benefits:

Reduce warehouse costs.

Reduce space needs.

Fewer damaged goods.

Improved cash flow.

Improved consumer satisfaction due to service, lower price and taste (fresher product).

Increased consumption.

It allows for a better balance of production and minimizes diverting.

Raynesford said he anticipates as many as 10 CRP projects by the end of this year with Lucky. A test with a second retailer will go live by June. And a third test -- this time with a wholesaler -- goes live in July.