Put the right stuff on the shelves: Page 3


You Can't Detect What You Can't See: Illuminating the Entire Kill Chain

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Expand to other CPFR processes: If the implementation focuses on joint business planning and sales forecasting, expand to order forecasting collaboration.

Add SKUs: If the pilot initially keyed in on a limited set of items, increase gains by expanding to other product categories.

Increase the level of detail: If the implementation focused on warehouse-level information, better results can be achieved by moving to store-level information.

Improved product offerings: Before CPFR implementation, buyers and sellers agree on which merchandise items to track, synchronize their SKUs, and identify additional members of a product line that are likely to sell well.

Automate the process: The vision of CPFR is one of managing forecasts by exception, which can be best achieved through an automated process--especially when the number of products and trading partners increases.

Add trading partners: The benefits gained from collaborating with one or a small number of trading partners can be extended to more partners. Even before "critical mass" is achieved, there are benefits to each relationship.

Integrate the results: The benefits of CPFR are fully realized only when the outputs of the collaborative process are integrated with the internal processes at both companies. For a supplier, this means using the collaborative forecast in the production planning, capacity planning, and materials requirements processes. For the buyer or retailer, this means integrating the collaborative forecast into buying, merchandising, replenishment, and financial planning processes.

Source: CPFR Roadmap, published by the Voluntary Interindustry Commerce Standards Association (VICS)
""The Web is playing a key role in CPFR because of the need to deal with forecasts and exceptions instantaneously. With systems like EDI, you're talking about a limited set of partners, and the Web can really open that up." --Andrew Love, secretariat for the Collaborative Planning, Forecasting and Replenishment Committee, has developed a set of business processes that entities in a supply chain can use for overall efficiency in the supply chain. "
In the second phase of the project, Saks will take advantage of the Web-based capabilities of the Logility Voyager suite to allow suppliers to participate in the forecasting. "We plan to have meetings this spring with major suppliers to share plans and see what and where it makes sense to dive into the collaborative side of things," Abercrombie says. "The Web makes the process more executable rather than sending things back and forth through faxes or [playing] telephone tag. If a vendor thinks we're planning too aggressively or not enough in certain categories, this lets them call that out to us."

Voyager's browser interface is also more cost-effective for delivering demand planning capabilities to all internal employees as well as outside partners vs. having to buy a complete CPFR package for each desktop, says Abercrombie. The server side of Voyager is hosted under Microsoft Windows NT; store employees and suppliers tap into the system via Web browser.

While he declined to put a specific price tag on the CPFR deployment, Abercrombie says that Saks should recoup its investment of "hundreds of thousands of dollars" in two to three years. The two primary benefits of the system will be to recapture lost sales thanks to better in-stock positions within stores and to get the right products into the right stores more often.

Pass the Kleenex

Kimberly-Clark, a $13 billion packaged goods manufacturer, is already taking advantage of the Web to participate in CPFR with Kmart, one of its major customers. Kimberly-Clark, which sought a CPFR partner for a pilot in 1998, wanted a way to use point-of-sale data from customers to create forecasts that were more in line with reality vs. its existing approach of forecasting based on statistics and historical sales data. "Our forecasts were always wrong, and that left us eternally struggling to get production matched up with the latest sales patterns," explains Larry Roth, senior consultant with the Neenah, Wis., firm.

Through the Voluntary Interindustry Commerce Standards Association (VICS), an organization working to improve supply chain processes in the retail industry and a proponent of CPFR, Kimberly-Clark and Kmart were paired on a pilot using Syncra System's Syncra Ct, a Web-based CPFR application. The partners' shared goal is to drive up in-stock rates of Kimberly-Clark products--for example, Huggies diapers, Kleenex facial tissue, and Viva paper towels--at Kmart stores to avoid customers buying alternative products or going to a different store if the desired item is not on the shelf.

The initial pilot, launched in January 1999, was for Kleenex facial tissue. Both organizations load their forecasting information into Syncra Ct, and the software compares the forecasts and delivers exception messages to both parties via the Web whenever a discrepancy exceeds an agreed upon percentage, Roth explains. More importantly, the system establishes a process in which the partners collaborate either through e-mail or telephone conversations to modify the forecasts. Since the pilot has been online, Kimberly-Clark has seen a 6.9% increase in stock and a 14% increase in sales at Kmart stores.

Based on that success, Kimberly-Clark and Kmart in December 1999 starting extending the Syncra Ct CPFR tools to all categories, codes, and locations. Kimberly-Clark also plans to pursue CPFR with as many customers as it can.

While it's not married to the Syncra Ct product, Roth says Web features are a critical part of the company's ability to broaden its CPFR reach. "It would be cost prohibitive to do it any other way," he says. "We sell between 160 and 180 items to Kmart--if you compare 26 weeks of forecasts on all items, it becomes a huge job. The only way to do that is by way of exception, and the Web serves as the best possible mechanism to make that possible." //

Beth Stackpole is a freelance writer living in Newbury, Mass. She can be reached at bstack@stackpolepartners.com.

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