e-commerce key to improving efficiency - Brief Article

Eurofood, April 26, 2001

The European food industry has been through many changes in the past five Years, and one of the most significant has been the steps taken by the industry to further improve the efficiency of the grocery supply chain.

Efficient Consumer Response (ECR) was first started by industry leaders back in 1992 in the US. ECR Europe was launched in 1994 to make the grocery sector more responsive to consumer demand and promote the removal of unnecessary supply chain costs, writes Dirk Salentin, Sales Director at efoodmanager.

The key industry initiative at present is Collaborative Planning, Forecasting and Replenishment or CPFR. This is a strategic cross-industry initiative that focuses on improving the supplier/ manufacturer/retailer trading relationship by allowing co-management of planning processes and efficient sharing of information. At the moment, many suppliers, manufacturers and retailers are considering the benefits that CPFR can offer and conducting pilot studies, but few have actually fully implemented it. That is something that many hope to see in the next few years.

Many companies now see that e-commerce can enable companies to further reduce costs. For the first time, it has become viable to trade using online web-based applications.

Transactions can now be completed from end-to-end, including online ordering, insurance, financing and logistics. In addition, these online trading applications have the potential to seamlessly integrate with companies' own internal systems thus providing a complete solution.

DIFFERENT STAGES OF E-COMMERCE ADOPTION

At the moment, each of the different parts of the supply chain is at a different stage of e-commerce adoption. Many of the world's top food manufacturers and multiple retailers are participating in consortiums, such as CPGmarket, Global Net Xchange (GNX), Transora, Worldwide Retail Exchange (WRE). At the same time in most cases these companies are developing private e-commerce solutions with software providing companies to the food industry such as efoodmanager in Germany. Each type of solution has its place in enabling companies to improve the coordination of trading relationships.

Perishable food is a particularly complex sector, as it is highly volatile and time sensitive. One company that has addressed this sector is Dusseldorf-based efoodmanager. Its food industry and e-commerce team has developed multilingual catalogues that conform to European industry standards for fresh fruit, vegetables, seafood, meat, and poultry.

Over the next 2-5 years, retailers requirements will become even more transparent directly to suppliers. Retailers and traders will be able to respond quicker to consumer demand with the aim of making the process of sourcing, procurement and planning a low-risk activity, ultimately reducing costs and providing consumers with better value, e-commerce will play a key role in the next stage of the European food industry's evolution. Watch this space.