Respondents were asked to rank theimportance of various issues in achieving profitable business within four areas of theircompanies: category management, supply side of the supply chain, demand side of the supplychain and customer service and logistics.

a) Category management
Evident from Fig. 2, the top ECR issues in category management overall are optimizepromotions and optimize introduction. Each country’s respondents have ranked theissues quite differently.

Fig.2 – ECR – Category Management

Optimizing promotions is important in the UK, Spain, France and Italy.However, in the US and Germany it is relatively unimportant against other issues.Wholesalers are least concerned with this issue (9%). Medium sized companies rank it veryhighly (43%).

Of relative importance in the UK, Spain,France and the US is optimizing introduction. In fact, in the US it is an extremelyimportant issue with half of respondents ranking it first. It is of less importance inGermany and Italy. Wholesalers and large companies ranked this issue highly (46% and 39%).

To optimize product range is very importantin Germany and relatively important in the US, while in Italy and the UK it isunimportant. Product range was of more importance to wholesalers and small companies (29%and 22%).

Optimizing assortment is most important toGermany. Italy also rated this issue relatively highly. Compared to other sectors, primaryproducers ranked assortments highly (22%) while there was little variation across companysize.

While most companies regard categorymanagement as important, its value varies from market to market. For example, optimizingpromotions in the US and Germany is relatively unimportant because in these marketsin-store promotional activity is strictly regulated.

Suppliers in the UK, US, Spain and Francemust optimize the introduction of products because advertizing expenditure to the trade ishigh and the time limit for success is relatively limited. The powerful retailers will nottolerate products which do not move off the shelves fast and they are swiftly delisted. InGermany and Italy the more regional nature of distribution allows a slower approach. Thesemarkets have a wider range of outlets with differing needs. Again, in the UK, the largeretailing groups allow less choice and flexibility in product ranges and assortments,stocking only those which are most popular.

b) Supply side of supply chain
Better forecasting was ranked very high by both Spain and the US. Not surprisingly it isthe wholesalers who ranked this issue as the most important (53%). Nearly half of alllarge companies also ranked better forecasting as their most important issue in terms ofsupply.

To purchase competitively was ranked veryhighly in Germany. It is an issue of concern to small and medium sized companies (35% and38%) rather than large companies (26%). Italian respondents felt this issue was much lessimportant compared to other countries.

Integrated suppliers was ranked as animportant issue by Italy which conflicts with their low ranking of closer integration withcustomers and suppliers in the previous section. This indicates, perhaps, that it isintegration with suppliers but not customers that Italy is concerned with. The US is in acontrary position to Italy. It has ranked integrated suppliers very low in importancewhile it ranked closer integration with customers and suppliers extremely high. Thissuggests that although integration is important to the US, it is with customers, notnecessarily with suppliers. Integrated suppliers is an important issue for primaryproducers (30%) and suppliers to major outlets (32%) while wholesalers (17%) are leastconcerned with this.

Fig.3 – ECR – Supply side of supply chain

The physical cost of distribution is more importantto large suppliers or those supplying large markets (US, Spain) and therefore moreaccurate forecasting will be necessary to help reduce costs of both transport and stock.The German market, with its fragmented regional supply systems, is less affected byinaccurate forecasting because errors are smaller. However, because price is fundamentalin Germany, purchasing competitively is vital to a profitable business strategy.

Many Italian suppliers are smaller and morespecialized and there is less opportunity for incremental profit from this strategicactivity. However, closer cooperation, partnerships or deals with other suppliers is seenas important to reduce costs and improve productivity – a strategy which is successfullypursued in the UK and France.

c) Demand side of supply chain
Continuous replenishment is favored by the UK, Spain and, to a lesser degree, by Germanyand the US. However, Italy did not rank this issue at all highly (9%). Suppliers to majoroutlets (39%) ranked this issue higher than other suppliers (both 32%) while preferencewas evenly spread across company size.

Store level depletions was ranked highly inimportance by France and Germany. Suppliers to major outlets ranked this issue as slightlymore important (39%) than wholesalers (36%). Medium sized and large companies (31% and32%) find this issue more important than small companies (23%). Co-managed inventory wasthe top concern of the US, while intermediate warehousing was ranked very highly by Italy.

Fig.4 – ECR – Demand side of supply chain

The pattern of efficient consumer response will varyfrom country to country because of the different retail distribution and differingshopping habits of consumers. The powerful multiple retailers of the UK and France demandcontinuous replenishment with constant monitoring of depletions. Smaller companies may nothave the muscle or technology to exploit this. Those that can, may have a competitiveadvantage. Co-managed inventory has given rise to a number of over-stock problems in theUS, which is now tightening up and using a better-controlled system. Intermediatewarehousing is more important to supply the numerous small retailers in Italy.

d) Customer services and logistics
Overall, looking at Fig. 5, the most important issues for suppliers are transport anddistribution planning and integrated electronic commerce. As with the previous issues,preferences are markedly different according to country.

Transport and distribution planning wasranked very highly by around half of all UK respondents and by a quarter of US respondents(who ranked it equal with Customer Account Profitability (CAP) ). Over a third of mediumsized companies ranked this as their most important issue. Suppliers to major outlets(32%) and wholesalers (31%) ranked this issue as more important compared to primaryproducers (25%). However, when looking at the two most important issues ranked together itbecomes more important to primary producers (61% compared to suppliers to major outletsand wholesalers (51% and 55%)).

Integrated electronic commerce is the mostimportant issue for Italy with nearly half of all respondents ranking it as their firstchoice. It is also the most important issue for France, equal with schedule manipulationand progression. This issue becomes less important the larger the company. It is also lessof a concern to suppliers to major outlets (14%).

Ranked highly by France and Italy wasschedule manipulation and progression and was ranked as an important issue by smallcompanies and primary producers (both 45%) when the top two issues are examined together.

CAP was ranked as the most important issueby Germany compared to other countries. The UK and the US also ranked it fairly high. Itwas only ranked first by one respondent in Italy. It is of little concern to primaryproducers (14%), but it is of serious importance to large companies (30%). Activity BasedCosting (ABC) was of relatively low importance to all countries, except Spain, indicatinga low usage.

Fig.5 – ECR – Customer Service &Logistics

With pricing and profitability of the productslargely dictated by the major retailers, suppliers must look to reducing costs if they areto improve the profitability of their businesses. Identifying the profitability of keyaccounts is increasingly important especially where prices are very competitive, forexample, Germany. The cost of servicing a small account may outweigh its value.

Although there are a greater number ofsmall companies in France and Italy, they are rapidly catching up with integratedelectronic commerce (or would like to).

Transport and distribution is a major costfor primary suppliers and particularly those which supply the major retailers direct (forexample in the UK). Its planning is vital to many suppliers, and increasingly contractedout to specialists.