ECR - Efficient Consumer Response Australiasia

The benchmark ECR Europe shrinkage project reported early in 2001 and took up from the many retail loss prevention studies and surveys, to further investigate loss within the fast moving consumer goods and supermarket sector.

When the ECR Australasia Board considered the loss prevention project proposal, the Australasian impact could not be quantified beyond the general acknowledgement that it was of substantial estimated cost to the industry. There was little in the way of formalised or documented retailer and manufacturer collaboration or measures available for review.

The project objective was to determine the level of stock loss in the Australasian grocery supply chain, in a way that identifies key points and methods of loss, so that actions can be taken by trading partners individually and in collaboration to reduce the impact. While recognising that loss occurs in many ways, potential solutions to reduce fraudulent supply chain loss were the principal focus of the project. The project was undertaken with a view to utilising as much of the ECR Europe project methodology as was possible.

The project determined, through an industry survey, that in their last reported year, suppliers, retailers and wholesalers in the supermarket industry reported the value of overall stock loss along the supply chain and within the retail store as A$942 million or 1.73% of industry turnover.

Of particular significance in an ECR context was the survey finding of a very low level of collaboration between trading partners on the issue of loss prevention. The recommendations of the ECR Australasia project team highlight how suppliers and retailers can collaborate to reduce the incidence of stock loss.

In addition to measuring the size of the stock loss problem in Australasia, this project sought to highlight the key points and methods of loss. The project team reviewed the extended supply chain, using their knowledge and experience to highlight the risk areas, report on best practices and promote local case study examples. Project participants were able to identify elements of the community that need to be included in a holistic loss prevention.

In providing a quantifiable estimate of the impact of stock loss on the supermarket industry in Australasia, ECR Australasia has identified an understanding of where and how that loss occurs. This should serve as a call to trading partners to review the manner in which they are addressing loss prevention and to establish whether the sum of two halves will be greater as a whole, in attempting to reduce the total cost of stock loss. The cost of the status quo is the enormous, and growing figure of A$942 million dollars per year to Australasian supermarkets and their suppliers.

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