THE SUPPLY SIDE 1996-05-06

J. Mark Harran

At a recent trade convention, an industry leader denounced Efficient Consumer Response for not hitting its original four-year implementation target. Therefore, ECR may not be a legitimate concept. The room was silent. I sensed some sighs of relief. It's simple. If ECR is not working as projected, blame the concept. Actually, the criticism of ECR was said tongue-in-cheek as a provocative opening to a very pro-ECR speech. But it does raise two significant, interrelated questions. Is ECR inevitably the right concept and, if so, why is its implementation so far off pace?

First, the concept behind ECR is inevitable. ECR is merely food industry nomenclature for the "new model" of supply chain productivity. Under ECR or any other name, the next level of productivity will happen.

In the "old model," companies could be successful by exclusively focusing on what they could control within their own boundaries. They could shift costs to trading partners to help themselves and blame the "other guy" for their own-created problems. Finger-pointing was common.

In the "new model," trading partners must take a total value chain perspective and work together to create performance results above what any one entity can achieve on its own. It is as critical to be a good customer as it is to be a good supplier. In the new model, leaders talk about and act on a joint accountability. The pragmatic point of difference is that the technology required to reach the next productivity level cannot be implemented by one company on its own. You cannot EDI, continuously replenish, cross-dock or the like with yourself. You need trading partner cooperation to achieve the benefits. It is as simple as that. So, if ECR is the "new deal," why is it behind pace?

First, take a good hard look in the mirror. The ECR implementation projection, made in 1992, used the experience of Quick Response in the apparel industry and made assumptions about how fast the food industry's adversarial mode could be broken and cooperation could become the norm. Obviously, it was too optimistic in the latter case.

Second, the original ECR study could have projected a longer time frame and avoided future criticism. However, a longer horizon might not have produced the sense of urgency needed to pull the industry out of its then cost-bloated condition.

Third, although behind original projections, excellent progress is being made. This was demonstrated many times over for the 1,800 attendees at the second annual ECR Conference last month in Chicago. For example, the 1995 progress survey shows commitment and implementation of key initiatives -- like CRP and EDI -- up significantly vs. 1994.

J. Mark Harran, formerly with Kraft General Foods, is a consultant based in Apopka, Fla.