How to Grow Revenues
Through Supply Chain
Relationship Management
Bill Burke
President, CEO
ePlains, Inc.
Strategy Perspective
Companies across industries are deploying pull-based
systems that require closer collaboration with fewer suppliers
to be successful.
Relationship management, including process performance
surrounding collaboration, is a key driver for establishing and
sustaining competitive advantage in this business model.
Focus
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Factors Driving Vendor Rationalization
Supplier’s Perspective – Why You Win
Operational Model – What Does It Look Like
Point of Operational Relationship Leverage
The 360 Degree Trading Partner Relationship
Enabling Technologies
Framework for Improvement
CPFR Adopters

Henkel
–
–
–
–
–
Lowered Distribution cost 28%
Reduced Freight cost by 18%
Increased Annual Sales 9% in Flat category
Improved Forecast Accuracy by 10%
Increased employee productivity by 20%
CPFR Adopters

Rite Aid
– Reduced “Out of Stock” by 65%
– Reduced Weeks of Supply by 6%

Increase in Customer Service Levels of 4.2%
Factors Driving Vendor
Rationalization

Mergers and Acquisitions – Darryl Hunter

Getting Close
– 16% of Retailers currently have formal Collaborative
Planning, Forecasting and Replenishment (CPFR)
Programs in place today
– This will grow to 32% within one year
– Gartner Group, 12th Annual Retail IT Survey, June 2002
Factors Driving Vendor
Rationalization

Need to respond
– Lowest price was the top priority. Now it is number
six.
– The need for speed to market to hit demand is the
dominant reason now.

Ready for Commitment
– 30% of Retailers surveyed for CPFR programs said the
only thing preventing them is their own ability to
produce the ‘one forecast’.
– Retailers with advanced planning systems in place will
triple from 18% to 59% by the end of 2003.
– Gartner Group, 12th Annual Retail IT Survey, June 2002
There is good news and bad news
Good news, one or two of your customer’s
suppliers per item/category will have the
ability to dramatically increase revenues. It
is winner takes all
 Bad news, it is winner takes all

If you are selected…

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Good news, you have the opportunity to increase
cash flow, reduce risk and maintain or increase
profits, all on the back of increasing revenue
Bad news, for most manufacturing companies,
success involves significant organizational
changes
–
–
–
–
–
Culture
Structure
Business processes
Enabling systems
Rewards
Then, there is more good news

You will likely need to move to a pull
based, closely coupled trading partner
relationship with your suppliers in order to
deliver on the commitments you will need
to make.
Supplier’s Perspective – Why
You Win

VICS CPFR Assessment Model criteria
–
–
–
–
Joint Business Planning Capability
Partnering and Trust Relationship
Business Process Reengineering Capability
Information Technology Utilization
Would you be selected today?
Objective Selection System
Weighted Summary
Mgmt. Philosophy & Customer Focus
60
Design Expense
Quality Records
50
Prototype Lead Time
Process Controls/ Documentation
40
30
Pro-E Capabilities
Logisitics
20
10
Design Verification Capabilities
0
Financial Stability
Document Control
Warranty 3yr. Participation
Reliability/Durability
Cost Effectiveness
Proven Technologies
Supplier Quality Management Process
Capacity
0
0
0
0
0
0
Darryl Hunter, APICS Presentation,
October, 2002
Relationship Management Determinants
of Success - Selection
Service level assessment and expectations
 Process enabling and assurance
 Tracking and measurement capability
 Team interaction proficiency recognized

Operational Model – What It Looks Like
CPFR Nine-Step Model
*VICS
Determinants of Trading Partner
Agreements

Formal agreement to work together to reduce
costs, reduce cycle time, improve end customer
service and create flexibility by collaborating
– Goals defined with timelines and definition of gain
sharing
– Blanket order agreements with release terms
– Exception definition
– Pricing according to conditions
Determinants of Trading Partner
Agreements

Information sharing defined
– Single customer forecast with frozen order period

Close collaboration of forecast updates and
exceptions resolution
– Weekly communications and updates, responsibilities
assigned
– Monthly program evaluations

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Systems and processes defined to support
information sharing and collaboration
Resources, responsibilities and process owners
defined and committed
Relationship Management
Determinants of Success Operational

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Weekly single forecast definition discussion
Forecast exceptions discussion
– Buyer side exceptions versus trading agreement
– Seller constraints
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Promotions coordination for single forecast
consideration
Monthly review and assessment interactions
Real time access to joint business plan and process
ownership definition
Disjointed Partner Relationship
Management
Forecasting
and Order
Scheduling
Engineering
and Product
Life Cycle
Support
Promotion
Trading
Partner
Customer
Service
Finance/Accountin
g
Relationship
Management
Supply Chain Relationship
Management
Business processes and systems that address
the critical needs of capturing, leveraging
and efficiently executing on trading partner
relationship interactions
360 Degree Partner Relationship
Management
Forecasting
and Order
Scheduling
Website
(Yankee Group)
Promotion
Trading
Partner
Engineering
and Product
Life Cycle
Support
Customer
Service
Accounting/
Finance
SCRM Key Processes
-Agreement repository
-Activities tracking and
measurement
-Workflow
-Relationship history
analysis
-Activity costing of
relationship
-Exceptions and
overall relationship
assessment
What are companies using today?
E-mail, fax, phone
Network storage of key documents
Independent components for:
-ERP
-Sales Force Automation
-Internet access
Portal
ERP Portal
Workflow
Messaging and Alerts Enabler
Is your organization ready to
support these relationship and
collaboration needs today?
Framework for improvement
Organizational, Culture, Rewards, Selection
and Education, - McKinsey 7 Stars
Processes and Enabling systems – SCRM
platform
Framework for improvement
Organizational, Culture, Rewards, Selection
and Education, - McKinsey 7 Stars
Processes and Enabling systems – SCRM
platform
Questions and Discussion
Bill Burke
ePlains, Inc.
bburke@eplains.com
(630) 510-3238