What is efficient consumer response (ECR)?

Efficient Consumer Response (ECR) is a strategy and approach to improve the value chain. It promises to generate financial benefits worth around 5% of retail sales, depending on the situation to which it applies.

This was originally developed in the grocery industry, however the principles have a much broader application. The strength is that the entire value chain, from the manufacturers' suppliers to the final consumer, has been fully analyzed to identify opportunities for improvement.

Many significant improvements are found in the manufacturer / retailer interface and involve both the supply of goods and the generation of demand (through promotional activities, etc.).

Many of the improvements require collaborative action between business partners (including adoption of enabling technology) and a cost model to aid in negotiations on the distribution of costs and benefits among partners.

What is the efficient consumer response?

The ECR of English "Efficient Consumer Response”Improves the supply of goods through the value chain to the consumer. It has been applied to groceries, food and sanitary products; however, the principles are equally applicable to other rapidly evolving consumer goods and consumer durables.

This value chain encompasses the consumer, retailers, wholesalers, manufacturers and their suppliers. You can also involve outside brokers and distributors.

Process analysis not only encompasses activities for the supply of goods but also those that generate demand. This is particularly valuable given that most value chain analyzes, even those that consider demand for the consumer, treat the value chain as a means to satisfy customer demands and do not consider the means to stimulate that demand.

origins

The ECR first started in the U.S. grocery industry in 1993, in an Efficient Consumer Response Report: "Improving Consumer Value in the Grocery Industry"

The aim was to improve the functioning of the food value chain, especially through better cooperation between business partners within it. Having obtained the benefits, the contentious question remains of who should recover them.

While the emphasis has been on providing benefits to the end consumer, in practice they can accrue anywhere in the value chain depending on market pressures.

In Europe, for example, the consumer market is characterized by a combination of threats and constraints, such as:

• A stable population.
• A blurring of distribution channels (perhaps best symbolized by service stations that become supermarkets and supermarkets that sell gasoline) leading to increased competence.
• The entry of alternative retail methods (for example, home-based electronic methods) that could take away market share from existing participants.

Given this environment, it is recognized that future competition must be constructive, not destructive.

Profits

• Cost: ECR has the potential to reduce non-value-added activities and also reduce inventory. The economic benefits amount to around 5% of retail sales.
• Chance: ECR promotes better data transmission and synchronization of activities within the value chain
• Quality: ECR enables consumer expectations to be better met, through increased process and delivery reliability and by avoiding degradation of perishable products.
• Customer service: ECR leads to better customer service in areas as diverse as avoiding stockouts, the ability to respond to particular requests from customers and the provision of stores that enable consumers to make decisions more easily (for example, through better store layouts and displays designed).
• Adaptability: ECR explicitly addresses the introduction of new products as a process to be improved.