BIG SUPPLIERS START IMPLEMENTING ECR

LISA SAXTON

ORLANDO, Fla. -- Some major candy and tobacco suppliers are beginning to implement the grocery industry's Efficient Consumer Response initiative by working with their wholesalers on continuous replenishment programs.

Others suppliers and distributors are less involved at present, however, and should begin the process of implementing ECR immediately or risk being obsolete by the year 2000 -- because ECR is definitely in the industry's future -- said Peter Harding, vice president at Kurt Salmon Associates, New York, who spoke at the American Wholesale Marketers Association's national winter convention here.

The ECR initiative calls for the industry to change the way it distributes and merchandises food to respond more efficiently to consumer needs and shopping patterns. Harding made general comments about ECR at an AWMA workshop, and talked with SN afterward about ECR's current status in the candy and tobacco distribution industry.

He told attendees that time is of the essence, and warned that clear communication between classes of trade can take up to nine months to achieve, due to the traditional resentment and mistrust between many suppliers and retailers.

Harding added that ECR is more than technology. In fact, although significant, technology is involved in perhaps only 20% of the implementation of ECR.

"It's about business practices," said Harding. "It's about the way we organize; it's about the way we work with suppliers, the way we work with customers."

He named seven key steps to arrive at a successful ECR implementation.

"First and foremost," said Harding, "it takes management commitment -- when the chief executive and the chief operating officer of an organization say, 'Yes, here is a clear opportunity for us to change the way we do business, take cost out, and

become a great deal more competitive."'

Secondly, a company needs to create a plan for change. "You need to create a great deal of concern through education and communication that the way we're doing business today is not the way you can be in business and survive by the year 2000."

The third step is to establish new performance measurements. "Anyone who starts changing behavior without changing the way they measure and reward behavior is destined to fail."

Initiating partnerships is the fourth building block, said Harding, who recommended grocery companies start with top-to-top level executive meetings between suppliers and retailers, then go to middle-to-middle meetings. "And finally, get people at the lower levels in the organization sitting down and discussing. It's not going to happen overnight."

A company shouldn't begin to re-engineer its business processes until the fifth step, which should change the way a company goes to market. Re-engineering would identify non-value-adding activities that add costs and inventory and help figure out a way to take them out of the system.

Only after these five steps are implemented, can a business develop new information technologies and systems.

"And finally," said Harding, "comes continuous improvement, which starts by empowering everyone in the organization to focus on the customer and find ways to take costs out of the system."

In conclusion, he said, "ECR is a critical strategy in the grocery industry. It certainly does not solve all the problems that everybody faces. There is no single silver bullet; no magic wand."