CPFR® Overview
BISG Board Meeting
November 20, 2003
Joe Andraski, Senior Vice President OMI International
What This Session Covers.
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Collaborative Commerce Dynamics
Collaborative Commerce Barriers
CPFR® Process Model
CPFR® Benefits
Globalization of CPFR®
VICS & VICS CPFR® Committees
Standards Enable Collaborative Commerce
CollaborativeCommerce Dynamics
Brings the supply chain closer to the consumer
Focus on what matters
Focuses attention on exceptions
Mandates reconciliation of exceptions
Supply constraints are real
Forecasts are constrained by supplier’s capacity
Predicting demand in a vacuum is difficult
Facilitates flexible relationships
Partnership in order to succeed
Collaborative Commerce
Initial Paradigm Shifts
Greater sharing of data and responsibility
Common goals and metrics
Forecasts aligned, & time phased across supply chain
Managed by shared exception criteria
Committed forecast ---> frozen orders
Pre-notification of issues in meeting consumer
demand
Capitalize on trading partner strengths, resources &
systems ---> 4 CPFR® scenarios
Barriers to Collaboration
Internal Alignment
Silo Mentality
Silo Compensation
Not Invented here mentality
Business Practices Out of Sync With Reality
Legacy Systems
Personal Comfort Zones
Lack of Leadership
Uninformed Opinions
CPFR® Definition
A shared process of creation between two or more
parties with diverse skills and knowledge delivering
a unified approach that provides the optimal
framework for customer satisfaction.
Voluntary InterIndustry Commercial Standards (VICS)
www.vics.org
www.cpfr.org
What about CPFR® in
Collaborative Commerce?
First step for consumer-centric supply chain reality.
Initial alignment of retailers & their suppliers to
consumer-based demand.
Built Industry Consensus on Real World Benefits
of Collaboration.
Visibility & focus on sources not symptoms of
supply chain inefficiencies.
Beginning of Collaborative Value Creation
The
®
CPFR
Process Model
Collaborative
Planning
FRONT END AGREEMENT
JOINT BUSINESS PLAN
Collaborative
Forecasting
CREATE SALES FORECAST
IDENTIFY EXCEPTIONS
RESOLVE EXCEPTIONS
CREATE ORDER FORECAST
Buyer
Seller
IDENTIFY EXCEPTIONS
RESOLVE EXCEPTIONS
GENERATE ORDER
CPFR® Model
Planning
Consumer Demand Forecast
Forecasting
Replenishment Forecast
Replenishment
®
CPFR
Value Proposition
Value Delivery
CPFR® Driver
Increased Sales
 Improved In-Stock
 Shared insights to Demand
 Seasonality/Regionality
 Promotional Causality
Reduced Operations Cost
 Lower Product Returns
 Reduced Expediting Costs
 Optimized Production Cycles
Reduced Inventory
 Less “Just-In Case” Stock
 Build to Order vs. Build to
Stock
Improved Relations
 Jointly solve problems vs.
blaming other party
Source: © E3 Corporation
CPFR® ROI Benefit Categories
Where do the Benefits Come From?
Inventory
Storage Costs
Inventory Expense
Intransit inventory for Rail
Reduced 3’rd Party Storage
41% Sales Benefits
22%
17%
>1%
13%
Increased Sales
Improved Margin
Customer Retention
Process Efficiencies 6% Transportation
Inventory Control
1%
Logistics
2%
Order Management / CSR 2%
Purchasing
>1%
Total Benefit 100%
34%
25%
1%
8%
19%
Carrier Management
>1%
Load Planning
>1%
Truck Tendering/Carrier Selection 1%
Truck Cycle Time
6%
Rail Cycle Time
10%
Demurrage
>1%
Excess Freight Charges
2%
Real World ROI Examples
Firms
Customer Service
Inventory
AMR Retailers
Summary
Sales +6 to 20%
Store Inv down
10 to 40%
AMR Suppliers
Summary
Shipment +2 to 10%
Del. Cycle cut 10
to 40%
Metro/Herlitz
In Stock + 50%
Sales +4%
Down 15%
Canadian Tire/
25 Suppliers
Sales +30%
Fill Rate +1%
Down 10%
Sainsbury/Nestl
e
In Stock + 30%
Supplier Fill +24%
Exp/Short Sav. £
2.8 Million
TruValue/
7 Suppliers
Sales +10 to 20%
Logistics Saving
10 to 30%
Ace/Manco
Sales +12%
Tesco/ P&G
In Stock 100%
Conad/Barilla
Item Sales +167%
Forecast
Improved
Improved
Improved 10%
DC Stock -75%
Improved 10%
85% Accuracy
The Globalization of VICS/GCI CPFR®
Benelux - 3
Spain
Delhaize le Lion
Royal Ahold
Vandemoorte
Eroski
Denmark - 2
UK - 11
Heineken
Dansk
France-2
Carrefour
Chanel
Germany - 4
Bayer
Henkel
Herlitz
Metro
Europe - 28
Americas - 70
Asia - 7
Switzerland
Canada - 2
Nestle
Argos
ASDA
Hasbro
J. Sainsbury
Kingfisher
Lever-Faberge UK
Somersfield
Superdrug
Tesco
Unilever UK
Woolworth’s
Canadian Tire
RONA
Taiwan
Mexico
CMC
Groupo Elektra
Argentina
Italy - 2
Israel - 2
Conad
Barilla
Supersol
Truva
Japan - 3
Hong Kong
Jusco
Unilever
Kao
Panasonic
YKK
USA – 66 Firms
A&P
Best Buy
Compaq
Eckert
GE Appliances
Home Depot
Johnson&Johnson
Liquid Nails
Meijer
Pacific Coast Feather
Rite Aid
Sports Authority
Tru Value Hardware
Ace Hardware
Binney & Smith
CVS
Eli Lilly
Harley-Davidson
Inland Paperboard
Kimberly-Clark
Liz Claiborne
Merial
Pharmavite
Saks
Staples
Walmart
Albertson’s
Black & Decker
Delta Faucet
Federated
Hasbro
International Paper
Kraft
Manco
Mitsubishi USA
PlumbPak
Sara Lee
Super Valu
Walgreen’s
Ashley Furniture
Broyhill
Do It Best
Flowers Bakeries
H.E. Butt
J.C. Penney
Lane
Mars
Nelson
Procter & Gamble
Schering-Plough
Target
Warner-Lambert
Bell Sports
Colgate-Palmolive
Eastman Chemicals
Fuji Film USA
Hewlett-Packard
John Deere
Levi
Master Lock
New Balance
Ralston Purina
Sears & Roebuck
Taylormade
Wicke’s Furniture
What is VICS?
Voluntary Interindustry Commerce Standards
Association
The mission of the VICS Association is to take a
global leadership role in the ongoing
improvement of the flow of product and
information about the product throughout the
entire supply chain in the retail industry.
VICS Members include the leading Global Retail
and Consumer Goods Manufacturers with a
combined liquidity that exceeds $1.2 Trillion
Participation in VICS Committees enables firms
and their trading partners to leverage the
benefits of Collaborative Commerce
VICS CPFR® Committee
Advisory Board
Working Committees;
Metrics,
Business Process,
Technology,
N-Tier,
CTM, and
Education and Publicity
VICS
®
CPFR
Committee Work
So Far.
What about your firm?
CTM Ver 1.0
Global CPFR® guidelines published
B2B marketplaces offer CPFR®
services
2004
2003
2002
2001 First CPFR® rollout
Roadmap to CPFR®
published, with
2000 Leading CompaniesPilot CPFR®
1999
pilot results
1998 VICS CPFR® Guidelines published
1997 VICS subcommittee develops CPFR®
1996 1st “CFAR” pilot
Standards Enable Collaborative Commerce
VICS Enables Standards Adoption
e-Collaboration
The Industry:
UCCnet, UCC, EAN, FMI,
GMA, Transora, WWRE,
ECCC, GCI, Wal-Mart, Kraft,
Colgate, Wegmans, P&G,
Ahold, Sterling Commerce,
IBM, Microsoft, UDEX, etc…
7. Collaborative product
development
6. Collaborative sales &
promotion planning
5. Collaborative logistics
management
You
Benefits
4. Collaborative Core Business
Transactions - Order, Shipment, Payment.
3. Data Synchronization
2. GLOBALregistry
1. Common data standards
Source: A.T.Kearney for GMA - FMI
Time / Degree of
trust & complexity
Any Questions
Find The Answers
at the next VICS CPFR® Committee Meeting.