SCM Terminology

ECR (Efficient Consumer Response)


Strategic concept created by the processed food distribution industry in the U.S. aiming to recover competitive strength. Whether a company can survive depends on whether the company can provide customers with higher values.

"ECR (Efficient Consumer Response)" is a strategy to increase the level of services to consumers through close cooperation among retailers, wholesalers, and manufacturers. By aiming to improve the efficiency of a supply chain as a whole beyond the wall of retailers, wholesalers, and manufacturers, they can consequently gain larger profits than each of them pursuing their own business goals. Companies who compose the supply chain can reduce the opportunity loss, inventory level, and entire cost, as well as increase monetary profitability by sharing the purpose of "customer satisfaction".

"ECR" is a strategic concept compiled by a consulting firm "Kurt Simon Associates " at the request of organizations concerning the U.S. processed food distribution industry, aiming to recover the competitive strength for surviving the turbulent time of the industry when discounters emerged in the U.S.

For "ECR", reengineering such as eliminating or adding business operations is performed by checking all business operations of a supply chain of companies by a criterion of whether they contribute to providing higher values to consumers. This aims to provide better convenience, better products, better quality, better selection of goods and build a "Win - Win" relationship among companies concerned (i.e. every company of a supply chain wins and gains profits). The first target of ECR is to reengineer business processes. To realize the reengineering, information technology such as EDI (Electronic Data Interchange) that is used for accurate and timely exchange of information between companies is necessary. Characteristics of ECR is that reengineering is performed considering final results given to consumers from unified business processes and that can be realized by information technology.

It is said that whether a company carried out ECR or not obviously decided the fate of the company, either growth and prosperity or change or out of business.


Taken with kind permission from the book:
"Understand Supply Chain Management through 100 words" by Zenjiro Imaoka.