This was echoed by the Chairmen and CEO’s of companies including Procter & Gamble, Unilever and Johnson & Johnson who agreed that, ‘despite all the talk about partnerships between retailers and suppliers there are still too many conflicts.’ They told the 3,300 delegates that too much time is being spent on how to split the cake rather than focusing on how to grow the cake. Unilever Chairman, Tony Burgmans, warned that unless retailers and suppliers worked closely together ‘there will be no cake left to share’ !

To enable true collaboration, which is one of the keys to unlocking the full benefits of ECR, many companies expressed the need for retailers to freely share their data with suppliers. This information will make it easier for trading partners to work together to measure the true commercial impact of ECR initiatives.

One official ECR group that has continually preached this view is the Profit Impact of ECR Task Force (PIETF). This team of suppliers, wholesalers and retailers from across Europe, assisted by PAP Consulting from the UK and latterly KMPG have, over the past three years, developed a common costing methodology and process which enables companies to work together in understanding the impact on costs and profits of both supply and demand ECR initiatives. In the past, the lack of a common costing methodology has resulted in many failed projects and arguments between partners as to whose ABC numbers and tools were right / wrong. This approach removes these two barriers to collaborative profit measurement.

Many successful ‘collaborative’ pilot projects have been completed with results presented at the last three ECR Conferences in Hamburg, Paris and Turin. This fully tested and validated methodology, combined with EPM Desktop – a leading edge costing tool developed by PAP Software specifically for the Consumer Packaged Goods industry – has also been adopted by other ECR task forces. It was the subject of at least three workshop/seminar sessions in Turin and was mentioned in a number of official publications including Transport Optimisation, Integrated Suppliers and Unit Load Identification & Tracking.

At the conference a new ‘Global Footprint’ was launched which includes an enabling area for ‘Cost/Profit and Value Measurement’ (see below). To coincide with this and on the request of many CPG companies that want industry information to enable them to quickly start to measure the benefits of ECR, the PIETF has developed a survey for the collection of data to create a ‘European Benchmark Database for Standard Costs and Productivities’. This survey is downloadable from ECR Europe’s website at www.ecrnet.org

With the emergence of new retailers to our shores and prices and margins being continuously eroded, it is even more important for companies to understand, in detail, not only their own costs/profits but also the impact on their trading partners.

Collaboration is the key. These methodologies, processes and tools are the enablers. And as the saying goes.....YOU GET WHAT YOU MEASURE !

For further details contact Tony Wood (tonywood@papdata.com) or Nick Hopkinson (nickhopkinson@papdata.com) of PAP Consulting / PAP Software. Tel: +44 (0)1323 724444

Date article published: 06/06/2000

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