by Bryan Salvage, editor
Retiring Iowa State University Professor Bob Rust recently made an interesting comment about challenges facing academia.
"One of the big challenges is updating teaching and research programs-and maybe slaughtering a few sacred cows along the way," Rust said. "There are a lot of traditions that get locked into some of these programs. People are reluctant to change."
What Rust said is especially true regarding how some companies conduct business. Maintaining tradition and reluctance to change have been the downfall of many companies.
In order to stay competitive, companies may have to slaughter a few sacred cows along the way and change the way they do business.
Continuing success depends in large part upon how well-and how quickly-companies can effectively respond to changes in the marketplace. In building a business, there is also a tearing-down process that is crucial. Companies must constantly cut time, costs and inefficiencies from their distribution systems.
In recent years, the meat industry has become involved in the Efficient Consumer Response program in an attempt to cut costs.
It has been estimated that ECR could save the food industry more than $30 billion annually through improved value, service, assortment and better-targeted products.
Getting the ball rolling
In short, ECR is about change in business processes; utilizing available technologies (identification codes, bar codes and electronic data interchange) to take costs out of the system.
In 1991, David Jenkins, chairman and CEO of Shaw's Supermarkets, told a Grocery Manufacturers of America meeting that the American food industry "is lagging behind all other industries in the adoption of state-of-the-art marketing technology (including, but not limited to bar-code scanning and electronic data interchange)."
If supermarkets and their suppliers delay much longer, they would lose control-or at the very least, input-into the direction of their essential administrative and logistics practices, Jenkins said at the time.
His words weren't lost on the meat industry. AMI and the Food Marketing Institute announced a major initiative in cost reduction involving joint-sector technology utilization nearly two years ago.
A joint industry ECR task force was formed to identify how existing technology can be better utilized by the food sector to reduce costs. Eleven food industry associations and more than 80 companies are now involved in the initiative, according to AMI. Several ECR pilot studies are underway, and it's anticipated they will cover fresh and processed meat
"AMI's involvement in ECR stems from its work in developing a new shipping container bar code (UCC/EAN 128), which forms the base for capitalizing on much of the information technology the ECR initiative will be trying to develop," according to an association communique.
One test conducted and supported by the Uniform Code Council on the UCC/EAN 128 code's impact on administrative functions, inventory management, shipping, sorting, put-away and selection indicates packers and processors can save more than 11 cents a case, and customers can save more than 15 cents a case, by using shipping container bar-code technology.
Through wide-spread adoption of existing technology used in ECR, many distribution costs can be better controlled, and some even eliminated, AMI notes.
Processors unfamiliar with ECR should start learning about it. No doubt, adopting ECR may require change in how processors do business, but they shouldn't be afraid to slaughter a few sacred cows in order to embrace it.