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Joyce M. Hoffman: Stephen F. Austin State University, Nacogdoches, Texas, USA, and
Satish Mehra: University of Memphis, Memphis, Tennessee, USA
Introduction
Market forces in the present day business dynamic, require that customer service and satisfaction take priority over all other key performance indicators of an organization. Given the intensity of competition among businesses, improving business performance through higher customer service has become an absolute top priority. Quickly responding to customer needs has provided a new motivation for businesses to improve their processes and design leaner operations (Womack and Jones, 1996).
For retail businesses, specifically grocery businesses, quickly responding to a customer's needs has become a total necessity. However, this change in business paradigm for grocers has brought out new challenges that require low-to-no inventories and reduction in costs for all trading partners. This paper examines the grocery industry of the service sector in US markets to analyze the adoption of new philosophies for quickly responding to customer demands through sound supply chain management (SCM) practices. Specifically, this study examines the efficient consumer response (ECR) adoption process of five businesses, and based upon the findings, proposes a set of managerial guidelines for future adoption of the ECR strategy.
Managing food industry supply chains
Supply chains in food industry offer an interesting challenge. This challenge revolves around managing demand at the point of sale (POS) and analyzing information generated through POS at various retail outlets. Essentially, the problem is one of managing inventories in face of changing customer needs. Contrary to manufacturing businesses, backordering is not a viable option for any grocery business. Hence, smart management of inventory to quickly respond to consumer demand becomes the focal issue in retail business supply chains. It is a challenge that must balance forces of continuous replenishment of products at POS and various costs associated with producing and delivering the product. As noted by Quigley (2000), knee-jerk reactions cannot solve supply chains woes. In fact, for grocery businesses, such reactions will increase inventory costs, an option not acceptable in the highly competitive markets of grocery industry. This complex grocery business environment has led to a rethinking of SCM practices in food industry leading to the introduction of ECR strategy.
ECR: its goals and objectives
ECR is an innovative strategy developed...