That means that more than ever before, retailer supply chains must cope with more complicated challenges and higher performance expectations. Supply chain management is often viewed as the management of efficient and reliable processes but Rene Carayol, consultant from the Voodoo Group, issues a warning about over-emphasising the technical aspects. Technology has a bigger part to play, but it's the people behind the processes that determine whether initiatives succeed. "It's the organisations that lead a little more, manage a little less, that are at the forefront of business." The concept of partnership has also come to the fore in a fast-paced environment and shortening response times is a mantra for retailers. Meanwhile, over the last three years, transport costs have risen steadily. Last year, according to IGD's annual retail logistics survey, they were 41% of total distribution costs, compared with just 35% in 1999. At this rate of change and with escalating fuel costs, transport costs could soon exceed those for warehousing. That's why backhauling is rising up the agenda as retailers seek to make more efficient use of their vehicles. Sainsbury is embarking on a new strategic relationship with Exel. The logistics service provider has been charged with managing Sainsbury's primary logistics, ie the leg between supplier and RDC. It's its job to prioritise which routes to optimise and to deal with other logistics providers to improve efficiencies to Sainsbury. Both companieshave pledged to share the commercial benefits. The links between logistics and commercial functions are now well recognised, and Sainsbury has recently merged its trading and supply chain functions into one integrated group. It aims to foster better communication as well as create more value. Sainsbury supply chain development director Andy Banks is aiming to break through one of the major supply chain barriers, the idea of planning in daily loads. "We want to move to eliminate the day', in other words to deliver within the same day of ordering". Sainsbury is also rolling out the new simple, online ECR Scorecard to all of its suppliers with the aim in each case of creating a list of actions to improve the relationship. Tesco has a different set of challenges. Its just-in-time' principles go hand in hand with a belief that value is defined by the customer and not the company. Waste therefore means any activity that doesn't add value for the final customer. Tesco is aiming to devise new processes that ensure the product is touched to a minimum (one touch). It also aims to pull the product through the supply chain at the rate of consumer demand rather than based on production constraints. Tesco believe this philosophy provides an opportunity to do things radically differently, because it takes an holistic view of the supply chain from raw material procurement to manufacturing processes right the way through to store shelf. Philip Clarke, IT and logistics director of Tesco, states: "We've been on a journey of lean thinking for five years. It's not a short-term fix." The learnings have been gained step-by-step in the UK, but Tesco plans to accelerate adoption for its international operations. Clarke points out "lean thinking gives the people setting up new businesses overseas something on which their supply chain decisions can be based". Rather than changing established practices, it can be easier to design new, lean processes from scratch. Tesco's main format overseas is a large scale hypermarket (80,000 sq ft). Normally, land is cheaper than in the UK and so it's possible to hold safety stock on site while the pattern of demand is fully established. Clarke confirms the multiple has a blueprint for creating a new supply chain overseas that follows four steps, starting with setting up a sales based ordering system and introducing in-house range management, to delivering directly to the first few stores with enough back room space to hold stock. When the store opens, an RDC is built and deliveries are centralised. The right indigenous products and services are essential, as is recruitment of talented native managers. But as much as possible, back office processes are standardised using tried and tested methods. Meanwhile Ahold's Dutch operation Albert Heijn has developed a state of the art today for tomorrow' replenishment programme. Procter & Gamble is now fully integrated into this new approach. The retailer can replenish within an 18-hour cycle with almost perfect service levels and near-full truck deliveries from plants in Germany and Belgium. Albert Heijn has an aggressive promotions strategy that can create uplifts in demand averaging between 10 and 15 times normal sales. Traditionally this has created a huge strain on the supply chain with out of stock levels on shelf for promotional items reaching 22% in a typical week. In response, it is testing Collaborative Planning, Forecasting and Replenishment to manage promotions with suppliers more effectively. CPFR is a rigorous approach to sharing information following a series of best practice' rules. Jan De Heij, supply chain manager of Ahold, says: "We're trying to find out whether CPFR works for both us and our suppliers plus also for our customers." Success is dependent on many factors. Rick Hayward, supply chain manager, P&G, says: "I think CPFR is certainly capable of improving results but it will not happen overnight. Everything is about the quality of co-operation between the two parties." Such co-operation remains vital to drive further supply chain improvements across British, European and global multiples. Efficient Consumer Response may not be an everyday buzzword any longer but its principles of "working together to meet consumer needs, better, faster and at less cost" are considered as vital as ever. To prove the point, nine of the leading UK retailers sit on the current ECR UK executive board. CPFR is an excellent example of ECR in practice, one of a series of B2B tools. The nature of B2B collaboration is growing steadily more sophisticated. From a one-way flow of data from retailer to manufacturer, partners are now exchanging data both ways and using workflow tools to develop efficient online processes. l By Tarun Patel, senior analyst, IGD, and Jon Woolven, director of research and new developments. {{FOCUS SPECIALS }}