Assessing the Mutuality of ECR Benefits, Costs and Risks

The adoption of ECR has been slow in many regions, despite its many potential benefits to manufacturer, distributor and retailer within a supply chain through reduction of inventory level and operating costs. There has not been any well developed theory that can explain this slow uptake. In this paper, we argue that the inherent characteristics of ECR have actually created barriers to it own adoption. As an inter-organisational system, ECR adoption requires cooperation and trust between trading partners, which are not likely to happen unless costs, benefits and risks of ECR implementation can be mutually shared. We show using two case studies conducted within one supply chain that an unequal distribution of costs, benefits and risks among manufacturer, distributor and retailer is inherent in the implementation of Cross-Docking, which typifies the overall ECR program. We also describe how one party in the supply chain is attempting to solve this problem of mutuality. The findings of this study lead to a new direction in understanding the barriers to adoption of ECR and inter-organisational systems in general