Efficient consumer response

The term Efficient Consumer Response (also ECR concept or efficient consumer response ) describes an initiative for cooperation between producers and distributors, aimed at cost reduction and better satisfaction of consumer needs. The value chain , from production to the consumers ' purchase decision , is examined for optimization potential . The aim is to link logistics-side rationalization potential with market growth potential on the marketing side . The cooperation between industry and trade enables potentials to be uncovered or realized that would not be possible through an isolated internal view.

Reasons for ECR

The importance of efficient consumer response for the uncovering of rationalization and market growth potential is shown by the decisive developments in the (European) consumer goods market that have been taking place since the beginning of the 1990s . These include the saturation of the markets, which causes a decline in market volume . Since then, competition has been increasingly carried out primarily at the price level. The result is price wars that require massive rationalization measures in logistics and human resources . This development is also characterized by the increased demands of consumers .

Description of the ECR concept

Efficient consumer response cannot be viewed as an entirely new idea. On the contrary, certain techniques of this concept, such as cooperation between industry and trade or the design of efficient distribution systems, have been used for many years. However, the ECR concept contains three major innovations:

Standardization: Previous cross-supply chain rationalization options were made more difficult primarily by inconsistent packaging or packaging carriers (e.g. pallets), different software and differences in the labeling of goods. The creation of standards through the ECR concept now enables rapid cooperation, which forms the basis for rationalization measures.
Rationalization and market growth: In contrast to previous collaborations, the ECR concept creates a connection between rationalization measures and measures for realizing market growth potential.
Multilateralism: Previous cooperation was limited to the bilateral level, while the Efficient Consumer Response is based on a multilateral cooperation idea.

Creation of uniform standards

As already mentioned, Efficient Consumer-Response aims to optimize the entire supply chain. For this it is first necessary to create uniform standards . These concern the following areas:

Efficient Unit Loads (EUL, "efficient bundling of goods"): This is about the uniform design of transport packaging and packaging carriers.
Electronic Product Code (EPC, "Electronic Product Code"): It is used for the semi-automatic identification of products, mostly in product packaging.
European Article Number (EAN, "European Article Number"): It is used for optical identification of products in product packaging as for the individual product.
Electronic Data Interchange (EDI "Electronic Data Interchange"): Paperless and electronic exchange of data such as orders, invoices and delivery notes between farms.

Building blocks of the ECR concept

On the basis of these standards, the processes in the supply chain can be carried out more efficiently. With regard to these processes, there can be:

logistics-based or supply-side processes, which are in the so-called efficient replenishment and
Marketing-oriented or customer-side processes that are summarized in product group management ,

can be distinguished. Both Efficient Replenishment and Category Management should now be explained in more detail:

Efficient replenishment (Eng. "Efficient supply of goods"): The aim is to build an efficient distribution system, i. H. efficient replenishment of goods. Production is controlled based on customer demand at the point of sale. The customer should be supplied with the right product in the right quantity and quality at the right place at the right time. The electronic data exchange tries to make the flow of information as efficient as possible.

Optimizing the supply chain through Efficient Replenishment also enables a faster reaction to changes in the market and better utilization of transport resources.

Continuous replenishment is a special form of "efficient supply of goods" . The manufacturer is integrated into the planning of orders and deliveries by continuously receiving current information such as inventory and sales data from the dealer. As a result, costly stocks and delivery costs can be reduced, and the availability of goods can be improved.

Another form of efficient replenishment is cross docking . This is understood to be a process within a logistical chain that eliminates the process of storage or interim storage. This is made possible by the time and quantity coordination between delivery to a cross-docking point (e.g. the central warehouse of a dealer) and delivery to the recipient.

Category Management (CM, Eng. "Merchandise Group Management "): Category Management is the demand-side dimension of efficient consumer response . It is operated jointly by industry and trade in order to create an offer that meets the customer's needs. The aim of Category Management is on the one hand to increase the benefit for the customer and on the other hand to optimize the (own) result. This is done by controlling product groups. A further development of Category Management is currently beingdiscussed- based on authors at Harvard Business School (Kracklauer / Mills / Seifert) - under the heading of Collaborative CRM . Collaborative CRM opens up new ways for industry and trade to jointly pursue customer acquisition, customer loyalty and customer development along the value chain. This is also based on the knowledge that traders v. a. Have data about the shopper , while the industry has better data about the customer as the user of the products.

In the following, in addition to category management , further basic demand-side strategies and modules will be explained.

Efficient Product Introduction (EPI): This is intended to increase the success rate of (new) product launches or to reduce the “flop rate” through cooperation between dealers and manufacturers. The collaboration takes place both in the areas of product development and product launch.
Efficient Store Assortment (ESA, dt. "Efficient assortment design at branch level"): The aim is to achieve higher productivity of the sales area and a higher turnover rate of the goodsthrough inventory and shelf optimization.
Efficient Promotion (EP, dt. "EfficientSalesPromotion") → Efficient Promotion : Activities of sales promotion between manufacturer and dealer should be coordinated. The aim is to reduce the costs of sales promotion measures.

ECR system

ECR concept

ECR components

advantages

Shorter delivery times and greater security of supply, as the ECR makes forecasts easier and more accurate
Reduction of the costs for transport and packaging, as goods can be put together more efficiently
Reduction of the rate of incorrect deliveries and thus the consequential costs of errors
Improved information flow within the supply chain reduces the impact of the bullwhip effect (bullwhip effect)
Sales promotions can be better planned
Customer satisfaction
For consumers: higher product availability, better price-performance ratio and freshness of the goods

disadvantage

Software and hardware systems for the establishment of the ECR resulted in the necessary high investments
Great coordination effort
Disclosure of information such as scanning data
Risk of data misuse
Willingness to cooperate and qualification of all involved required
Shift in power between trade and industry

Practical examples

Cooperation between ADEG Österreich Handelsaktiengesellschaft and Unilever Austria GmbH Ice Cream & Frozen Food: These companies were able to achieve a significant reduction in shelf gaps (from 9.1 to below 4%) through cross-company process optimization with special consideration of consumer needs . Gaps in the shelf result from the lack of items on the shelf. Lower sales as well as negative effects on the competition of the retailer and the manufacturer can be the result.

Spar , Österreichische Warenhandels-AG: This company was able to significantly improve its earnings thanks to ECR. This was achieved by reducing inventories and increasing the best-before date of items on the shelf . By lowering stocks, storage costs could be reduced. This cost saving is passed on to the consumer in the form of lower sales prices . By increasing the best before date, the customer benefits above all from the freshness of the products.

Other companies that successfully apply the ECR concept are: Henkel Wasch- und Reinigungsmittel GmbH, Nestléprodukte GmbH, Ikea , u. v. m.

literature

A. von der Heydt (Ed.): Handbook Efficient Consumer Response. Vahlen Verlag, Munich 2000.
Dirk Seifert (Ed.): Efficient Consumer Response 4th expanded edition . Rainer Hampp Verlag, Munich / Mering 2006, ISBN 3-86618-052-7 .
Rolf Bühner (Ed.): Management Lexicon . Oldenbourg, Munich / Vienna 2001, ISBN 3-486-25146-5 .
Beck Lexicon . Deutscher Taschenbuch Verlag GmbH & Co. KG, Munich 2005, ISBN 3-423-05810-2 (CH Beck: ISBN 3-406-53211-X ).
ECR Austria . ISBN 3-9501630-0-X .
D. Arnold, H. Isermann, H. Kuhn, H. Tempelmeier (Eds.): Handbuch Logistik . Springer Verlag, Berlin / Heidelberg / New York 2004, ISBN 3-540-40110-5 .
J. Hertel, J. Zentes, H. Schramm-Klein: Supply chain management and merchandise management systems in retail. Springer, Berlin a. a. 2005, ISBN 3-540-21916-1

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