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Quick Response and Efficient Customer Response (QR/ECR)

QR is a management concept created to increase consumer satisfaction and survive increasing competition from new competitors. It intends to shorten the lead time from receiving an order to delivery of the products and increase the cash flow.

The QR (Quick Response) system, a production and distribution system for quick response to the market, was developed for the U.S. textile industry to survive the global competition with low-cost foreign companies. VICS (Voluntary Interindustry Commerce Standards Association) is the organization that is promoting QR. The EDI (electronic data interchange) protocol used for the QR system, that is a standard protocol for information exchange between the U.S. retail industry and companies, is also called “VICS”, which is also a subset of ANSIX. While “VICS” is the name of the organization that promotes QR, it is also the name of EDI, i.e. the exchange of data (all data such as order placement and billing data) between companies who support QR.

QR was created from a project to improve the supply chain management of the daily necessities industry such as the textile industry and ECR (efficient consumer response) concept was created by the processed food distribution industry. Both concepts were developed from the standpoint of increasing consumer satisfaction and as a mean to survive againat certains types of competitors that producer-retailer alliances call discounters and category killers. These concepts intend to shorten lead times from order receipt to delivery, minimize unsold inventory by holding minimum inventory levels, and increase cash flow.

Both QR and ECR are said to be concepts suggested by Kurt Simon Associates, a US consulting firm. They contain the same concept as constraint-based supply-chain management, which aims to increase the speed of product flow at the manufacturing floor, shorten lead times, and improve throughput.

In other words, supply chain management is a methodology for increasing the speed of product flow across companies and finally increasing cash flow to strengthen the survival power as industry bodies. Although QR, ECR, and supply chain management have different names, they all have the motive of “survival” in common.

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“.

7.gif” 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.

The retail sector is by no means free of inventory concerns and has applied its own best practices to keep waste out its supply chains. The best application of this mentality, and in contrast with other models, has been the prudent use of technology to bring substantial benefits to collaborative planning.

As a variation on a now familiar theme, techniques similar to those found in VMI and JIT have come into practice for finished goods under the monikers Efficient Consumer Response (ECR) and Quick Response (QR). Although the same in principle, ECR and QR are different from a VMI model for a couple of important reasons. First, ECR and QR apply to finished products in a consumer goods model. Applicable to both grocery and hard consumer goods (electronics, etc.), this type of merchandise is in the last stages of its supply chain journey, just prior to getting into the hands of the final user.

Another major difference between ECR/QR and VMI is that the retail sector has historically used technology much more effectively than other industries have. The application of standards-based bar code technology in the retail sector has allowed for much more effective timing of supply with demand, inventory management and a complete reversal of the cash-to-cash cycle. Without bar code standards like the Universal Product Code (UPC), none of the fundamentals of ECR/QR would be possible, making the already slim margins in retail that much more difficult to achieve.

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