Efficient consumer response (ECR) is an approach to supply and demand that focuses on identifying what a customer wants and then marrying the elements of the information and supply chains with those wants. The process normally extends through the fulfillment stage, ensuring that customers are delivered the goods and services they purchase in a matter that is perceived as timely and efficient.
At the heart of efficient consumer response is properly assessing consumer demand and tailoring the demand management process to meet customer expectations. For example, if the average consumer of a given soda product wants to purchase at least a dozen units of the product each week, the manufacturer will make sure production levels are high enough to meet that demand. In addition, the manufacturer will make sure the soda is delivered to retailers in a timely manner, so that consumers do not have to wait when they want to make a purchase.
While the exact methodology involved in efficient consumer response will vary slightly from one setting to another, there are a few core principles that tend to apply in any situation. First, the process of creating and supply products must be consistent. Failure to do so runs the risk of not being able to meet customer expectations, which in turn will prompt the consumer to seek other avenues of fulfilling those wants and needs. For this reason, producers must accurately gauge the current demand for a given product, and make sure the production quotas consistently provide finished goods that meet that level of demand.
Another important component of efficient consumer response is making sure the manufactured products are readily available to consumers in quantities they consider desirable. Should a customer be unable to purchase the desired number of units, he or she may choose to go with a competitor product that is in ample supply. When this happens, the client may choose to stick with the new product and never come back even when the supply is increased.
The process of efficient consumer response also involves balancing production costs with the unit pricing paid by consumers. Here, the goal is to set the unit price at a level considered attractive by the consumer, and competitive with the pricing offered on similar products. At the same time, the unit price must be sufficient to cover the total cost of providing the goods or services to consumers, while also allowing the business to make some sort of profit off the operation. Constant review of this component is necessary, since fluctuations in the cost of raw materials, changes in consumer tastes, and a number of other factors may provide justification for adjusting the unit price upward or downward.