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Alexandre Medeiros Rodrigues
Michigan State University The Eli Broad College of Business Department of Marketing and Supply Chain firstname.lastname@example.org
There are questions that still remain unclear: Is ECR a brand new concept? What are the main differences and similarities between ECR and other time based efficiency concepts, like Just in Time? Is there the possibility to unify these concepts, developing essential characteristics of all these systems? The objective of this article is to conduct a literature review to answer these questions. Summary of Efficient Consumer Response Concepts In light of the definitions of the ECR movement6 and the additional concepts included by the Global ECR Scorecard, the basic ECR general concepts were summarized on Figure 1. In the central part on Figure 1 are the basic goals to be achieved by ECR initiatives. Surrounding this box, we classified essential concepts as strategic versus operational decisions; these concepts enable the achievement of ECR goals. First of all, the system should be consumer driven, providing consumers with products and services that consistently meet or surpass their demands and expectations. It is a system that has to react dynamically and to ensure continuous improvement of consumer satisfaction, products and quality. These requirements drive all the system, as seen at Part 1 on Figure 1. ECR is also focused on reduction of both costs and response times. To achieve cost reduction, management is focused on product categories. Both the value of the product and the needs of the consumer are taken into account. Variants of Activity Based Costing (ABC) are used to relate costs and profits with activities. In addition, to achieve reduction on response times, information flow and product flow should be as automated as possible, eliminating redundancy on the supply chain. The elimination of redundancy decreases overall inventory of the system. These concepts are summarized on Parts 2, 3, 4, and 5 on Figure 1. Finally, planning and decision should be made in a collaborative way, among all traders at the supply chain. A core requirement for achieving this goal is to establish better relationships, 2
Abstract: The objective of this article is to conduct a literature review to investigate the main differences and similarities between Efficient Consumer Response (ECR) and Just-inTime (JIT). Our effort is to unify these time based efficiency concepts. The main characteristics of ECR and JIT concepts are presented. A comparison between the two systems is elaborated and a framework is developed to highlight the similarities and differences. One conclusion is that both systems are highly similar, and that ECR has evolved from the basic objectives and emphasis of JIT, shifting from a plant/firm level to a supply chain level. A second conclusion is that this shift is not fully completed yet, and there is room for improvement of both concepts. Keywords: Efficient Consumer Response, Justin-Time, Supply Chain, and Logistics. 1 Introduction Since the introduction of the concept in 1993, Efficient Consumer Response (ECR) continues to impact much of the grocery industry. Before that, this industry was characterized by trade-practice wars, based primarily on price, which separated all partners on the supply chain1. The ECR initiative is credited with improving these trade relations, lowering supply-chain costs and helping make retailers more competitive2. Today, ECR is considered a necessary tool, being adopted by a great number of companies3. But, ECR has not yet fully realized its expected benefits. There is still a lack of integration throughout the supply chain4. One possible cause for this lack of integration is the need for the formally definition of the process5.
such as alliances, with partners. Information sharing is necessary for this integration in order to reduce variances and uncertainties in the supply chain, and to permit accuracy and speed in the system. There is also a high need of measurement to achieve control and measure performance of the whole system. These concepts are on Parts 2, 6, 7, 8, 9 and 10 on Figure 1.
dimension, the focus is on the integration with partners in the supply chain and the continuous measurement of performance to permit continuous improvement of the system. This is represented on Parts 3, 4 and 5 of Figure 2. In addition, operational efforts aligned with these strategic goals are needed. Total Quality programs are implemented at the plant level. The workforce organization and layout are changed. Product families and development of common parts are used to increase efficiency of production. Although the decisions are decentralized, they must be taken on a consensus of all functional areas involved. These operational requirements are defined on Parts 6, 7, 8 and 9 of Figure 2.
Figure 1 – Summary of ECR concepts
Just-in-Time (JIT) JIT refers to a collection of practices that eliminate waste and unnecessary activities7. The goals are the achievement of higher quality and flexibility and the continuous improvement of the production process. The focus is on the elimination of work-in-process inventories. Organization structure is also affected by the implementation of JIT philosophy8. The greater the JIT orientation of the firm, the greater the level of performance measurement information available to logistics managers, the more specialized and decentralized logistics becomes, and the more integrated logistics strategic decision-making is with other functions. The financial and market performance of the firm also improves with JIT implementation9 These basic characteristics of JIT are summarized on Figure 2. In a strategic
Figure 2 - Summary of JIT concepts
Comparison between ECR and JIT We use the frameworks of both concepts, summarized on Figure 1 and Figure 2, to guide the comparison analysis. There are three general concepts in both ECR and JIT that are very similar: (A) What drives the system, which overall characteristics are emphasized, (B) Objectives and Goals and (C) Integration Strategic Focus. This general concepts are represented on Parts A, B and C of Figure 3. First, both concepts are driven by consumer requirements (Part A on Figure 3). This means that product and service characteristics should meet consumer expectations and that all flow of information, materials and products are pulled by market demand and information. There is a high emphasis on quality for both product and service,
with continuous improvement focus. These characteristics are identical in the two systems. Second, the goals and objectives on both concepts focus on inventory reduction, lead-time reduction and unnecessary or redundancy elimination (Part B on Figure 3). The elimination of these inefficiencies would lead to cost reduction and fast response in a dynamic system.
Conclusion Our conclusion is that ECR and JIT are highly similar concepts. As a whole, it seems that ECR has evolved from the basic objectives and emphasis of JIT. The contribution of ECR is the new set of objectives that had to be defined when moving from functional areas integration within a firm to integration in a whole supply chain. Our second conclusion is that this shift from a firm level to a supply chain level is not fully completed yet. There are some concepts of JIT that were not treated by ECR, like organizational changes issues. In addition, the new concepts developed by ECR could also be applicable to JIT context. Analysis of value could be used in a plant level. This has the interesting characteristic that when one concept evolves, it can create new ideas for the improvement of the original concept from which it was conceived. One contribution of this paper was the formal definition of ECR concepts. Other contribution is the initial effort towards the unification of the two concepts, which could drive efficiencies efforts in better directions. This study is exploratory and has its limitations. Additional concepts such as Quick Response (QR) and Lean Logistics should be added to the analysis. References:
Ryan Mathews, “A look back over 90 years”; Progressive Grocer; Jul 1998; pg. 8-16 2 Mark Tosh; “ECR-a concept with legs, heart and soul”; Progressive Grocer, New York; Dec 1998; pg. 4-5 3 Glenn Snyder; “ECR: A survival tool”; Progressive Grocer, New York; Sep 1994; Vol. 73, Iss. 9; pg. 101-112 4 Katherine Doherty; “Road to Nowhere?”; Food Logistics; March 1998; No. 9; pg. 30-36 5 Ryan Mathews; “Is ECR dead?”; Progressive Grocer; September 1996; pg. 28-32 6 Kurt Salmon Associates, Inc.; Efficient Consumer Response: Enhancing Consumer Value in the Grocery Industry (Washington D.C.: Food Marketing Institute, 1993) 7 Donald J. Bowersox, David J. Closs; Logistical Management – The Integrated Supply Chain Process; New York: McGraw-Hill;1996, 1st edition; pp-489-491 8 Robert W Hall; “Reforming The Manufacturing Organization”; Survey of Business, Knoxville; Summer 1989; Vol. 25, Iss. 1; pg. 21-26 9 Richard Germain; Cornelia Dröge; Nancy Spears; “The implications of just-in-time for logistics organization management and performance”; Journal of Business Logistics; 1996; Vol. 17, Iss. 2; pg. 19-35
Figure 3– Comparison between ECR and JIT
Finally, both ECR and JIT require the focus on Integration at the strategic level (Part C on Figure 3). This integration means the establishment of alliances with partners to share information, measurements, and to allow collaborative planning and decision. The other areas not highlighted on Figure 3, represent differences due to the differences of focus level between ECR and JIT. JIT is more focused in a plant level, while ECR is more focused in a Supply Chain level.
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