Efficient consumer response as a supply chain strategy for grocery businesses

Abstract

Quickly responding to customer needs has become a major priority for retail businesses such as grocery operations. Customer satisfaction is an absolute for staying competitive in these retail operations. This paper discusses efficient consumer response (ECR) as a supply chain strategy in grocery businesses by analyzing the adoption of ECR strategy by five major grocery operations in US markets. Furthermore, a management action plan is presented for future adoption of ECR strategy by similar business operations.

The role of top management in supply chain management practices

“…In fact, the balance of power between actors in a supply chain can mean that actors are forced to collaborate (Mattsson 2002). Such a forced collaboration initiated by coercion from one side does not guarantee mutual gains and better optimisations for the whole supply chain which are in line with the purpose of SCM (Hoffman and Mehra, 2000).…”

“…a willingness to cooperate with other supply chain members is of central concern for a SCO and is also an important factor for a successful collaboration (see e.g. Hoffman and Mehra, 2000). Win-win thinking is a prerequisite for this, otherwise the other part will not collaborate of their own free will which is a must for a true SCO.…”

“…The possibility to buy technology at a reasonable price is good, but it does not automatically guarantee that it is successfully implemented and used. In their study about the adoption of ECR among companies in the grocery industry, Hoffman and Mehra (2000) discuss this problem and state that technology barriers still have to be tackled: "If there is one element that can cause the breakdown of any "best designed" supply channel, it is the technology factor. In this stage, a clear understanding of the technology needs of all partners must be assessed followed by information flow planning."…”

“…But, even if ECR involves more areas than only pure communication and bar coding, which is the case for QR, above all ECR is about information sharing (Christopher, 1998). Hoffman and Mehra (2000) means that the underlying idea with ECR is that sharing e.g. point-of-sales data will create a natural pull strategy in the supply chain.…”

“…This "war" in the industry led to a loss of productivity and market shares (Alvarado and Kotzab 2001). At that moment, the grocery industry started to look at other industries and was inspired by the garment industry and their concept of QR (Hoffman and Mehra, 2000;Kurt Salmon Associates, 1993;Schary and Skjoett-Larsen, 2001), which can be considered as a precursor to ECR, although less comprehensive and more focused on bar coding and the technology base of Electronic Data Interchange, EDI (www.cpfr.org). In 1992, 14 trade association sponsors in the grocery industry in the United States created a group called Efficient Consumer Response Movement whose purpose was to change the business climate considerably.…”