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Assessing The Effect Of Ecr On Financial And Operating Performance

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  • Dooley, Frank J.
  • Mayberry, Matthew
  • Wilson, Christine A.
  • Boehlje, Michael

Abstract

A debate has emerged in the literature and trade press whether the adoption of Efficient Consumer Response (ECR), the supply chain management initiatives for the food industry, leads to improved inventory and financial performance. Using regression analysis, the financial performance for adopters of ECR is about 3 to 4% higher than for non-adopters. However, the growth in profit does not appear to come from improved performance for traditional inventory measures (such as inventory turnover, inventory-to-sales, or inventory-to-assets). The driving force behind these improved financial measures can be attributed to changes leading to a shorter cash conversion cycle. In addition, size matters; ECR is more effective due to economies of scale, information technology, and buying power.

Suggested Citation

  • Dooley, Frank J. & Mayberry, Matthew & Wilson, Christine A. & Boehlje, Michael, 2002. "Assessing The Effect Of Ecr On Financial And Operating Performance," 2002 Annual meeting, July 28-31, Long Beach, CA 19788, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea02:19788
    DOI: 10.22004/ag.econ.19788
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    References listed on IDEAS

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    1. Capps, Oral, Jr. & Griffin, James M., 1998. "Effect Of A Mass Merchandiser On Traditional Food Retailers," Journal of Food Distribution Research, Food Distribution Research Society, vol. 29(01), pages 1-7, February.
    2. Robert P. King & Paul F. Phumpiu, 1996. "Reengineering the Food Supply Chain: The ECR Initiative in the Grocery Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(5), pages 1181-1186.
    3. Phumpiu, Paul F. & King, Robert P., 1997. "Adoption Of Ecr Practices In Minnesota Grocery Stores," Working Papers 14311, University of Minnesota, The Food Industry Center.
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    1. Dooley, Frank J. & Roucan, Maud & King, Robert P., 2004. "Ecr And The Importance Of Collaboration For Supermarkets," 2004 Annual meeting, August 1-4, Denver, CO 20368, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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