ECR needs industry CPR

We urgently need an industry-wide drive for operational excellence to remove inefficiencies and eliminate waste in the supply chain, providing consumers with better, faster and cheaper products; however, this can only be achieved through stronger collaboration between parties across the value chain.

As an industry, we have the operational capabilities and tools to achieve the vision of ECR, however some players have fallen behind and need to catch up. As an industry, we need to recognise that all players need to step up their game in terms of capabilities, infrastructure and process and systems alignment.

Within the grocery value chain, there is significant potential for cost reductions and improvement of availability of products on shelf. The current set up suffers from low utilisation of assets, high inventories, double handling, error prone processes and global benchmarks show us to be far from best practice

Significant rework is created by rejected or incomplete orders that result in return flow of physical goods and this is often driven by using incorrect data in the OTC process, incorrect picking/loading/handling of goods, damaged goods and so on. Rework creates unnecessary transport, handling, paper work, material or product wastage.

As an industry, we have the responsibility to collaborate so that all players can achieve excellence, increased productivity and ultimately consumer satisfaction, which benefits everyone in the FMCG industry.

Areas needing attention

• Harmonise master data: data issues are broader than incorrect 'static' product or SKU information, like product description, dimensions, weight, etc. Incorrect 'dynamic' data generated in the OTC process, like minimum order size, lead-time, etc. create inefficiencies and failure to service across the value chain.

• Optimise inventories across the value chain: the current value chain has many stocking points at both manufacturer and retail side driving unnecessary inventory levels. Demand and supply planning cycles are not sufficiently collaborative across the chain and companies are moving slowly from a 'push' towards a 'pull' approach.

• Improve OSA and OSF: the supply chain suffers from low on shelf availability. Improvement of on shelf freshness is seen as a huge potential to offer better product and reduce the scrapping of valuable products especially in the perishables category.

• Optimise logistics: goods flow suffers from unnecessary idle/waiting times, low load factors, double handling, etc. which drives up cost and creates capacity shortages in peak season.

In conclusion, we need to create an industry wide initiative to drive operational excellence by reviving ECR, however all parties in the value chain need to participate and support this drive.