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Conclusion |
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Key Results
Most European retailers and manufacturers are still in the early
stages of their development in Category Management. In the study
manufacturers achieved a maturity score of 40%, while retailers
were only slightly ahead at 44%.
Manufacturers 
Retailers
Leading retailers appear to be far ahead of many manufacturers
in implementing ECR replenishment concepts. The average score
for retailers was 49%, while manufacturers were much lower with
an average of 31%.
Manufacturers
Retailers
Manufacturers and retailers are fairly evenly matched in their
use of Enabling Technologies. Manufacturers are 38% and retailers
35%.
Manufacturers
Retailers
Looking at the overall level of maturity in Europe, and thus
how far manufacturers and retailers have gone down the road towards
putting ECR into action, at present, retailers are slightly ahead
with an average in the study sample of 44%, versus manufacturers
scoring 36%. Hence, the industry sits slightly below the halfway
mark. Many leading companies are clearly interested in ECR. Some
are starting to make rapid progress internally, while others are
commencing trials in more extensive joint working. However, huge
benefits remain available.
Manufacturers
Retailers
It is worth remembering that the study was biased towards the
larger and more progressive companies as represented on the ECR
Board, and that the average for the industry as a whole will be
less, perhaps 25% to 30%. That figure can be translated into no
more than a basic awareness of ECR, with perhaps a few companies
running pilot projects with one or two suppliers or customers
[Coopers & Lybrand].
Conclusion
The previous discussion on Efficient Consumer Response shows
that most methods and techniques used in ECR were already known.
But ECR shows how these methods and techniques can be used with
each other and with new technologies. So the way in which they
are used is new. In this setting the focus moves to a total chain
optimization instead of independent optimization of parts in the
chain. The goal is obviously to decrease the costs throughout
the chain and a more dynamical reaction to consumer needs.
There is no doubt that ECR can make a real difference to the
business prospects of those companies, which successfully implement
it. Judging by the interest shown in the activities of the ECR
board, there is no doubt that many leading companies regard ECR
as a powerful initiative for a change. But surprisingly it is
the traditional benefits that these companies are looking for
from ECR: profit, revenue, market-share and fundamental competitive
strength.
These companies understand that the creation of outstanding consumer
value is the only secure route to achieving sustainable financial
success. The industry faces a number of threats over the next
few years, with developments such as on-line shopping, which would
open up new retailing possibilities, giving consumers the ability
to replenish their larders without ever visiting grocery stores.
New entrants with different capabilities could bring even greater
pressures to bear on those players who have not maximized their
efficiency and effectiveness.
Few people disagree that the industry is in need of reform. Compared
with other high profile industries, which have undergone radical
changes in recent years, for example the automotive, electronics
and financial services industries, other industries must realize
that they too will have to undergo its own version of "Big
Bang".
More than a few "sacred cows" have grown up and become
fat over the decades. Many are now surely well past their shoot-by
date. For instance: why shouldn't scanning data be used to drive
the entire replenishment process? Consumer off-take is usually
the most constant line in the forecasting system. Everyone agrees
that it is all the other influences, such as trade terms, special
deals and temporary promotions, which cause variations to be massively
amplified. They are fine if they lead to better consumer value,
but far too many do not.
The solution is simple, as is often the case. Trading partners
need to have informed discussions about which activities lead
to benefits and which do not. Only then can they take rational
decisions on which practices to keep and which to change. The
"survival of the fittest" rule is still destined to
apply in the ECR world. Companies' willingness and ability to
achieve excellence in ECR implementation will largely determine
how much they will win or lose. Therefore in my opinion the following
slogan holds: EDI or DIE!
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If you have
any suggestions, comments, or links related to any of my subjects,
please send E-mail to: S.Bhulai@few.vu.nl. |
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