CRP PROVING HEALTHY MOVE FOR DOMINICK'S

DENISE ZIMMERMAN

CHICAGO -- Warehouse inventory reductions ranging from 30% to 50% are among the direct benefits resulting from a continuous replenishment program at Dominick's Finer Foods, Northlake, Ill.

Improved product turns -- from 15 to 60 turns in some cases -- and service levels topping 98% are other dividends seen from the program, which, although initiated three years ago, requires to be fine-tuned on an ongoing basis.

"As we went along, it became obvious how important performance measurement is. You need constantly to evaluate and adjust," said Nick Ciaccio, vice president of logistics, grocery and general merchandise procurement.

During a presentation, titled "Making ECR Work for You," at the Food Marketing Institute show here this month, Ciaccio discussed the chain's continuous replenishment program and stressed the importance of assessing resources and expectations throughout the development and implementation stages.

"Also, you have to recognize you're going to have variables. We reviewed our manpower and our organizational structure and we changed people's jobs," he said.

A cross-functional team was created to ensure a smooth transition as management roles were redefined and continuous replenishment activities were separated from category management initiatives.

The development of separate staffs -- logistics analysts heading CRP on the supply side and category managers on the demand side -- provided for a greater level of project focus. However, the restructuring also reduced the degree of communication between the two groups because their work areas were made separate.

Now, Dominick's is looking to recreate the interaction that occurred prior to the restructuring,

an example that illustrates how such Efficient Consumer Response endeavors require constant refinement.

"We are now considering a review of the physical [office] layout to encourage chance meetings of our people, to change the geography and group dynamics," said Don Fitzgerald, Dominick's director of grocery merchandising.

"We'd like to have a greater integration of logistics analysts on the category management side for the development of strategic plans, event marketing, schematic support and more involvement in the end review process," he added.

"Some of the greatest conclusions and findings occur in the hallways, the cafeteria," he added. "With a change in the physical layout we can generate more of these chance meetings."

Ciaccio agreed. "It is important that they work very closely together and that communication is ongoing as far as promotions, business reviews and category planning goes," he said.

In the area of promotional activity, Dominick's is looking to conduct a pilot test next month that would enable promotional announcements and cost changes to be transmitted via Uniform Communication Standard II transaction sets for electronic data interchange.

"I have to say we've been talking about a live test 'next month' for almost a year now," he acknowledged, "but we are getting closer. It's certainly not as fast as we hoped but we're almost there."

Further in the future, Ciaccio said, the 97-store chain would explore several new initiatives next year, including transmission of advance ship notices via UCS II, electronic funds transfer, computer-assisted ordering and UCC/ EAN-128 serial shipping container code labels.