Efficient consumer response at its best?

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Related tags: Efficient consumer response, Supply chain management, Online shopping

It costs around 50p to get an average, ambient case of grocery products from the back door of a Tesco or Sainsbury regional distribution centre...

It costs around 50p to get an average, ambient case of grocery products from the back door of a Tesco or Sainsbury regional distribution centre through to the back door of their store. What is less well known is that it costs almost as much again to get that same case through the 'last 50 yards' -- ie on to the shelf for the consumer to buy.

Various experiments are going on now to test the use of half pallets of fast-selling products to wheel directly on to the shop floor on 'dollies'. They are displayed in pairs so that one dolly, having been emptied by consumers, can be replaced by the full twin dolly.

The retailer saves at least a half of the 50 pence he would otherwise have spent putting the contents of the cases on to the shelf a single unit at a time. It is an obvious example of efficient consumer response (ECR) at work and could potentially impact on a small number of fast moving products that account for a significant share of total volume sales.

The cost of filling the dolly and of renting the specialist equipment required to enable 'hands-free' display on the shop floor is presently borne entirely by the manufacturer.

The retailers claim that the benefit to the manufacturer is constant availability of product on the shop floor and, consequently, higher sales.

So the manufacturer is paying to overcome the inadequacies of the retailer's merchandising process and the retailer is pocketing 25 pence a case.

Has the sales increase materialised for the manufacturers who have tried this system?

In two recent, medium-term trials with major manufacturers the answer has been no, there has been no measurable increase in sales.

I urge all high volume suppliers to work with retailers to achieve this fine example of ECR wherever possible, but I also urge retailers to share with their suppliers the real benefits to the supply chain so that suppliers can maximise the use of dollies. If retailers continue to hide their benefit, this will become just another example of killing a good idea through greed.

Tim Knowles is Director, ProActive http://www.proactive21.com

Related topics: Supply Chain, IT, Services

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