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Jim McLaughlin Past Chair VICS CPFR Committee

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1 Jim McLaughlin Past Chair VICS CPFR Committee
Collaborative Commerce ….from a VICS perspective AA&FA – Information Systems Committee Meeting October 19, 2006 Jim McLaughlin Past Chair VICS CPFR Committee

2 Topics VICS & CPFR Background
Recent Research on Collaborative Commerce Adoption Accenture CPFR Survey Results Best Practice Retailer & Vendor Benefits Success Factors Barriers & Opportunities CPFR Certification Program

3 VICS Overview The VICS Association takes 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 & consumer goods industries.

4 VICS Overview 230+ Member Companies
Observing 20 years of Industry Defining Standards & Guidelines Retailers, Manufacturers, Transportation Services, Service Providers & Standards Organizations Software Products Consulting EPC Global NRF GS1 AA&FA All Work is Conducted by Volunteers

5 VICS Committees Apparel and Footwear, RFID/EPC Committee
Collaborative Planning, Forecasting & Replenishment (CPFR®) VICS E-Collaborative Commerce Initiative Hardlines Data Synchronization Committee General Merchandise & Apparel Data Synchronization Committee Floor-Ready Merchandise Committee Logistics Committee Retail Out-of-Stocks Committee

6 VICS Committees Apparel and Footwear, RFID/EPC Committee
Collaborative Planning, Forecasting & Replenishment (CPFR®) VICS E-Collaborative Commerce Initiative Hardlines Data Synchronization Committee General Merchandise & Apparel Data Synchronization Committee Floor-Ready Merchandise Committee Logistics Committee Retail Out-of-Stocks Committee

7 VICS CPFR® Committee Mission – Develop guidelines an roadmaps for various collaborative scenarios, which integrate demand and supply planning and execution Continue to improve on existing guidelines, tools and critical first steps that enable CPFR implementation

8 VICS CPFR® Committee Implementation….Implementation…. Implementation
Sub Committees reflect our focus Content & Execution Metrics (Adoption & Operational) Internal Collaboration Education/Certification Apparel & Footwear

9 CPFR® for Apparel and Footwear Subcommittee
Membership – Belk, Dillard’s, Federated Department Stores, Hudson’s Bay Co., Jones apparel Group, Kellwood Co., Levi Strauss & Co.,Liz Claiborne, Inc., Nygard International, Saks, Inc., VF Corp., Wacoal America, Inc., Wolverine World wide, Inc..

10 CPFR® for Apparel and Footwear Subcommittee
Mission – Identify, develop and document standardized collaborative processes for Apparel & Footwear industries, leveraging proven VICS concepts. Scope – Assortment Planning, Allocation, Analytics, Space Planning, Category Management and Replenishment Current activities are focused on Assortment Planning with the plan of piloting the newly defined process in Q Who should join – Senior managers who understand the organization’s planning, forecasting and execution business processes. Contact – or

11 History of Temporary Competitive Advantages in Supply Chain
2001: CPFR 1996: ECR 1992: VMI/Co-Managed 1986: Quick Response (QR) 1960s: Just-In-Time/Total Quality A long series of supply chain advances has delivered a long series of temporary competitive advantages. And another is on the way. In the early 70s Japan brought the quality revolution and Just In Time. Better cheaper customer service with far less inventory. Esp for early implementers About , QR was born as an application of JIT to general merchandise, particularly softgoods. Better cheaper customer service with far less inventory. Esp. for early. VMI or co-managed inventories was the next leap, with similar results if the CG did not cheat to make quartlery $. About 1992, after general merchandise started eating the grocers’ lunches with cost-effective customer service, supermarkets started to apply QR-like ideas plus some other good ones for better customer service with far less inventory. Esp for early. About 7 years ago, supply chain management, which offers, you guessed it, better customer service with far less inventory. Early implementers gaining well, esp CGs. Next, wave is something with collaborative. CYY. Next great competitive advantage. Millions for consulting & software. The next great gain is collaborative, but operating closer to real time. Buyers and suppliers share the data on sales and promotions and related topics. Systems compare actual to plan and alert mangers to the biggest problems to solve as they arise. Companies ratchet down inventories while keeping customer service levels at the highest economic level for increased in-stock sales. Data is synchronized at buyer and seller. And for early implementers it will come JIT.

12 Isolated Companies Remain Inefficient
Supplier Buffer Inventory Unexpected orders Short lead time pressures Unknown Demand Variables New stores Retailer promotions Retailer stock status Item transitions Assortment changes Retailer Buffer Inventory Short shipments Late shipments Poor Promotional Forecasts No prior history Little consumer research New Items Limited market research The best optimization tools fall short if only leveraged within a company’s four walls. Example: Some Retailer systems automatically buy incremental safety stocks to account for statistical lead-time variability of a supplier. This ensures that targeted service levels are achieved. Used in isolation of the supplier, however, this does not solve the possible root cause of the issue. Why are lead times/fill rates variable in the first place? The supplier may not have adequate information to properly fill orders in the way that they are ordered. By sharing forecasts and order requirements partners can reduce buffer inventory and streamline the supply chain. © E3 Corporation

13 The Next Competitive Advantage: Collaborative Commerce
2001: CPFR 1996: ECR 1992: VMI/Co-Managed 1986: Quick Response (QR) 1960s: Just-In-Time/Total Quality A long series of supply chain advances has delivered a long series of temporary competitive advantages. And another is on the way. In the early 70s Japan brought the quality revolution and Just In Time. Better cheaper customer service with far less inventory. Esp for early implementers About , QR was born as an application of JIT to general merchandise, particularly softgoods. Better cheaper customer service with far less inventory. Esp. for early. VMI or co-managed inventories was the next leap, with similar results if the CG did not cheat to make quartlery $. About 1992, after general merchandise started eating the grocers’ lunches with cost-effective customer service, supermarkets started to apply QR-like ideas plus some other good ones for better customer service with far less inventory. Esp for early. About 7 years ago, supply chain management, which offers, you guessed it, better customer service with far less inventory. Early implementers gaining well, esp CGs. Next, wave is something with collaborative. CYY. Next great competitive advantage. Millions for consulting & software. The next great gain is collaborative, but operating closer to real time. Buyers and suppliers share the data on sales and promotions and related topics. Systems compare actual to plan and alert mangers to the biggest problems to solve as they arise. Companies ratchet down inventories while keeping customer service levels at the highest economic level for increased in-stock sales. Data is synchronized at buyer and seller. And for early implementers it will come JIT.

14 What is Collaborative Commerce?
It is the Inter-Enterprise business relationship and partnership consensus It provides a mutual focus on the consumer, from store shelf demand through manufacturing supply It promotes mutual supply chain visibility and optimization of cross functional processes * Revolutionizing the Supply Chain * Advancing Business Relationships, Partnerships and Alliances * A new way of thinking about business relationships

15 Next Step in Supply Chain Evolution
Collaboratively Integrating Demand on An End to End Basis CPFR® Single Shared Consumer Demand & Order Forecasts MANUFACTURER SUPPLY LOGISTICS RETAIL CONSUMER Single Shared Order Fulfillment Forecast Removing the Walls Between trading partners Arena

16 Next Step in Supply Chain Evolution
Collaboratively Integrating Demand on An End to End Basis CPFR® Single Shared Consumer Demand & Order Forecasts MANUFACTURER SUPPLY LOGISTICS RETAIL CONSUMER Single Shared Order Fulfillment Forecast Removing the Walls Between trading partners Arena

17 Collaborative Commerce Based on Aligning Supply and Demand
CPFR® is a collaborative PROCESS approach to increasing product availability while reducing inventory across the supply chain. Trading partners share forecasts and other supply chain data over the Internet. CPFR® technology identifies exception conditions when: Plans do not match Forecast accuracy is out of tolerance Overstock and understock conditions exist Partners resolve exceptions through negotiation and plan revisions.

18 CPFR® Prepares Industry for Collaborative Commerce
Planning Forecasting Replenishment

19 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 Solutions (VICS) Webster's definition: Act of working together as in writing a book. Cooperating with the enemy.

20 Supply Chain Collaboration:
More Specifically… Supply Chain Collaboration: What’s happening?

21 Supply Chain Collaboration:
More Specifically… Supply Chain Collaboration: What’s happening? A Collaborative Study on the Progress of Collaborative commerce

22 Who Collaborated to perform this Study ?
Soonhong Min, Anthony S. Roath, Patricia J. Daugherty, Stefab E. Genchev, Haozhe Chen and Aaron D. Arndt Division of Marketing and Supply Chain Management, Michael F. Price College of Business, The University of Oklahoma, Norman, Oklahoma, USA, and R. Glenn Richy Department of Management and Marketing, The University of Alabama, Tuscaloosa, Alabama, USA

23 About this Study….. Purpose
Assess the current level of supply chain collaboration and identify best practices Approach Literature research, surveys and personal interviews resulting in a conceptual model profiling behavior, culture and relational interactions associated with successful collaboration. 52 companies participated

24 Some findings…. It works….if you work at it Benefits are measurable
- Efficiency/effectiveness gains - Market position improvement It takes time to develop More than one path to success Key enablers - Expectation Alignment - Information Exchange - Process, process, process

25 A Model of Supply Chain Collaboration
Antecedents Collaboration Consequences

26 A model of supply chain collaboration
Antecedents Strategic Intent Internal Alignments Relationship Orientation Relationship-Specific Investment Free Flow of Information and Heightened Communication Formalization Collaboration Consequences

27 What to Consider Before You Begin
Strategic intent Capability-based function integration Internal alignment Process mapping Streamlining internal operation Relationship orientation Ongoing Relational Long-term oriented Relationship-specific Time investment Personal Employee training Physical resources Information technology Information flow Free flow of information and communication Formalization Performance metrics Goals and objectives Roles/responsibilities, and reporting Collaborative planning and scheduling Collaborative technology Type of shared information

28 A Model of Supply Chain Collaboration
Antecedents Strategic Intent Internal Alignments Relationship Orientation Relationship-Specific Investment Free Flow of Information and Heightened Communication Formalization Collaboration Information Sharing Joint Planning Joint Problem Solving Joint Performance Measurement Leveraging Resources and Skills Consequences

29 Key Collaborative Activities
Information sharing Forecasting Customer demand Materials requirement Marketing planning Production capacity and scheduling Joint planning Mutual sales and performance targets Budgeting Prioritizing goals and objectives Joint problem solving Product development/redesign Logistics issues (shipping, routing, backhauling,pallet size, packaging) Joint performance Performance reviews on a regular basis measurement Measuring KPI (customer service, cost savings,productivity, etc.) Determining rewards and taking corrective actions Leveraging Resources and capacity Skills and knowledge Specialization

30 A Model of Supply chain Collaboration
Antecedents Strategic Intent Internal Alignments Relationship Orientation Relationship-Specific Investment Free Flow of Information and Heightened Communication Formalization Collaboration Information Sharing Joint Planning Joint Problem Solving Joint Performance Measurement Leveraging Resources and Skills Consequences Efficiency Effectiveness Profitability Reinforcement and Expansion of the Relationship

31 Outcomes of Collaboration
Mutuality Mutually beneficial and synergistic Efficiency Cost reduction Reduced inventory Shortened lead-time Streamlining supply chain process Effectiveness Improved customer service Increased market share Better pricing New product development Profitability Return on investment Sales per target segment Reinforcement and expansion Trust of the relationship Commitment Interdependency Mutual involvement

32 A Model of Supply chain Collaboration
Antecedents Strategic Intent Internal Alignments Relationship Orientation Relationship-Specific Investmetn Free Flow of Information and Heightened Communication Formalization Collaboration Information Sharing Joint Planning Joint Problem Solving Joint Performance Measurement Leveraging Resources and Skills Consequences Efficiency Effectiveness Profitability Reinforcement and Expansion of the Relationship Expand

33 Closing Thoughts… in the relationships for less than five years
On average respondent companies had only been involved in the relationships for less than five years All respondents reported good returns on their investments Collaborative relationships varied, some very basic, some quite comprehensive ****Success is measured in differing ways**** The study’s detail reflects the CPFR model elements

34 Results of 2006 Accenture Collaboration Survey Presented by: Mary Rollman & Melissa Wright
September 25, 2006 Copyright © 2006 Accenture All Rights Reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

35 Purpose Present the results of 2006 Collaboration Survey conducted by Accenture Compare the results of the 2002/2004 surveys with the 2006 as well as other collaboration surveys that have been conducted Understand the progress that has been made and the barriers and key success factors in Supply Chain Collaboration in the Consumer Goods & Retail industry

36 Survey Approach Compare the results of the 2002/2004 surveys with the 2006 Three surveys were conducted, one each in 2002, 2004, and 2006 Multiple executives from 45 Fortune 1000 companies were surveyed Survey consisted of a mix of US and European companies Industry Specific - Consumer Goods & Retail Industries The 2002 and 2004 surveys were cross industry emphasizing Manufacturing, High-Tech, and Transportation but also including Finance, Insurance and Utility industries Participants were asked a variety of questions about collaboration with supply chain partners: Benefits / Barriers Key areas for collaboration Implementation levels Use of IT platforms in collaboration

37 Key Findings: The bottom line up front
Survey results have mixed messages Challenges with trust between trading partners yet respondents found that collaboration yielded stronger strategic relationships with trading partners Executives continue to list Supply Chain collaboration as one of their key strategic priorities yet continued growth and progress of collaboration programs has slowed The number of Collaborative business partnerships have begun to plateau Tangible and measurable benefits continue to be a challenge Collaborative business practices are standard and expected between trading partners.

38 Since 2002, the importance of collaboration has seen a significant increase on the agendas of top supply chain executives of Fortune 1000 companies. How important is developing collaborative relationships in Supply Chain Planning and Execution Operations with your trading partners? Source: Accenture 2006 Survey

39 What are the drivers for collaboration growth from 2002 to 2006?
98% surveyed in 2006 classified SC Collaboration as ‘Somewhat’ or ‘Very’ Important for the next 3 yrs Collaborative pilots between well-known retailers and manufacturers have achieved well-documented benefits Executives are well aware of the importance of collaborative business processes “[Traditionally] collaboration was often viewed as a "nice to have," not a necessity. Our research indicates that during the past six months, CIOs and CTOs have increasingly focused on understanding the business value of collaboration and on enabling collaboration.” – Gartner Research, October 2005

40 More companies are experiencing a “status quo” of collaborative activity; scaling collaboration may have reached it’s first plateau Compared to 3 years ago, would you say the level of collaboration conducted with your trading partners has: Increased, Decreased, or Remained the Same?

41 Has Collaboration Hit a Plateau or Become a Standard Business Practice?
The importance of collaboration continues to grow, however, the level of collaboration does not mirror this growth Do the trends for the level of collaboration in European companies differ from the level of collaboration trends for US companies? No. Forrester conducted a primarily American survey in January 2006 and similar results were obtained to the primarily European Accenture survey. “Leading firms that have invested in functional areas, traditional collaborative tools, and supply chain visibility have seen their ROIs plateau” - Forrester Research, January 2006 Gartner’s Supply Chain Management Hype Cycle 2004: Collaboration was in Trough of Disillusionment with 2-5 years until mainstream adoption 2006: Collaboration is in Trough of Disillusionment with 5-10 years until mainstream adoption

42 Progress over the last 3 – 4 years has been slower than predicted
Progress over the last 3 – 4 years has been slower than predicted. There are still many programs in the pilot phase and only a handful of collaboration programs in the CG & Retail industry are matured. What is the level and status of your collaboration programs with your suppliers? (2006) 54% of the companies surveyed are either in the pilot or rollout phase of their collaborative program

43 Is there a correlation between the status of collaboration programs and the level of collaboration?
Over half of the companies (54%) have majority of projects in the Pilot and Planned phases The survey results also indicated that over the next three years, the average company will still be in the Pilot phase for projects Is this telling us that collaboration cannot be a standard business practice if the average project is not yet mature? Do the vendors that have “Remained the Same” make up the same portion that are “Mature” / “Very Mature” phases? There is no clear correlation between the company’s status of collaboration and its level of collaboration Is the implementation of collaboration hindered by available technology?

44 IT Platforms are used to support the majority of Supply Chain collaboration programs.
Are you using an IT platform to support SC collaboration with your partners?

45 Although only half of companies have an IT Platform that supports collaboration, collaborative IT spending in 2006 / 2007 is expected to increase. Vendors Strive to Provide Unified Collaboration Platforms “The collaboration software and services market is evolving to support customers that are developing enterprise collaboration strategies” Forrester Research, August 2006 IT spending in 2005 was lower than normal, however, in manufacturers are expected to increase IT spending especially their collaborative technology spending - Forrester Research, November 2005

46 Although data synchronization and technology enablement hurdles seem low in the CG & Retail industry, there are a broad range of other issues to manage in SC collaboration programs. Which one of the following is the greatest barrier to collaborating with your trading partners? Lack of trust Cultural/behavioral Have not Identified Right Partner Performance not easily Measured Concerns about Data Security Technology and data hurdles Unclear Value Proposition

47 Hurdles and hindrances are a main factor for slowing collaboration growth
Trust “42% of retailers and 43% of manufacturers believe there is a fundamental lack of trust between trading partners that stymies collaboration.” – Forrester Research, November 2005 Accenture Client Experiences Process Insufficient organizational / process enablement from partner or internal Negotiation process in hands of commercial and procurement organizations with no “end-to-end” view of total-cost of ownership Value Unclear value proposition Challenges with measuring the value therefore it requires a leap of faith

48 Cost reduction benefits continue to be a top driver for collaborative activities and the desire to build strategic relationships is stronger. Where have net benefits been realized as a result of collaborating with your trading partners? Stronger Strategic Relationships Cost Reduction /Savings Increased Sales / Top Line Growth

49 Net Benefits All three net benefits are even in weighting – why?
Possibly because strategic relationships have developed over the course of the four years the survey has been conducted Case Studies show proof: CPFR pilots between retailers like Walgreen’s and manufacturers like Kraft have achieved well-documented benefits in increased inventory turns, reduced lost sales, and out of stocks.

50 Levels of benefits realized from collaboration programs
Executives consider SC collaboration as a strategic priority, but identifying benefits realized from past or present programs is not always obvious. Levels of benefits realized from collaboration programs

51 Level of Benefits Level of benefits
Only 15% of respondents rated the benefits as “High” 65% of respondents rated the benefits as “Low” or “Not at all” 32% of respondents don’t know if benefits have been realised or don’t focus on benefits from their collaboration programs With collaboration, there is no control group Hard to measure benefits that are directly caused by collaboration Highest benefits have been achieved in: Improved product availability Inventory reduction Process cost savings Stronger strategic relationship

52 Supply Chain executives see closer relationships with their partners as one of the most significant benefits (drivers) of a collaborative relationship. Which one of the following factors would most persuade you to invest in integrated processes and technologies with your trading partner? Source: Accenture 2006 Survey

53 Significant Drivers of Collaboration
In 2006, no one success factor stood out – success is down to a combination of success factors, including Safety & Environment Improved track & trace, improved returns and recycling management All objectives for driving Collaboration are indicated to become more relevant over time, suggesting the reasons for Collaboration are becoming increasingly clear as the topic is better understood

54 Conclusion At the Executive level, Supply Chain Collaboration is seen increasingly important both across and within industries Companies continue to implementing collaborative processes across a wide spectrum of Supply Chain activities But there are still too many pilots happening on unfertile ground (rules are contradictory with established practice) Key success factors and barriers to collaboration are gradually being recognized and addressed Success will hinge on practicing best practices over a long period (“the key to success is more in the cyclist than in the bicycle”)

55 Kurt Salmon Assoc. & 7th online Survey results for 2005 – Collaborative Assortment Planning
Sales Opportunities – move toward cut to order from cut to forecast. 25% more sales opportunities, increased order value Inventory Control – up to a 50% reduction in excess inventory. Increased order fill rates by 12% Cycle Time- Reduced cycle time by up to 4 weeks per market. Orders received 2-3 weeks earlier. Information Visibility & Accuracy – shared “single version of the truth” removed time, complexity and inefficiency out of the planning and execution processes Over 50 Retailer and Vendor respondees

56 Collaborative Planning Best Practices: Retailer Benefits
Better internal collaboration and streamlined processes drive more accurate plans, increasing effectiveness of external collaboration Cross organizational access and visibility, 365, 24/7 Corporate objectives immersed in collaborative process Actionable data for more effective decision making “1 version of the truth”: All involved parties access real-time product information and plans Pre-market collaboration empowers buyers to focus on product during market Collaboration offers both visual and quantitative assortment planning – Style/Color/Size by store Eliminates much of the clerical activity involved in ordering These are some of the results of implementing these best practices for assortment planning and collaboration Communication is more efficient across the board, and visibility into corporate-wide planning activity is greatly increased Because you have a defined process in place and a real-time platform to execute on, information flow is much more efficient Single version of the truth Every party involved, including management, buyers, and planners, has access to up-to-date information, 24/7 from any Internet browser Management can understand how plans are shaping up against financial and strategic objectives by running reports - At the press of a button, we can get instantaneous view on what is going on across organization, from the widest rollup down to individual door activity And historical data can be leveraged throughout the process to optimize current plans The result of this enhanced visibility and communication is better decision making, which leads to more productive, more profitable assortments Beyond internal collaboration, communication between buyers and sellers (sharing both visual and financial information) is much more efficient Users trade real-time product catalog and assortment information instantaneously Buy plans are always up to date with latest product information Everyone is on the same page pre-, during, and post market The entire process is streamlined from financial planning through order placement, eliminating much of the stop and start of manual planning (Excel, fax, phone) These practices also reduces the administrative aspects of planning significantly so buyers can focus on what counts during market - product One-click ordering, electronic order integration At the end of market or post, once have finalized the buy, we can generate a bulk PO on 7thOnline that can flow seamlessly into order management system Improved planning, better product assortments on the selling floor, more productive SKUs and ultimately higher sales Improved planning, better product assortments on the selling floor, and ultimately higher sales

57 Collaborative Planning Best Practices: Vendor Benefits
Earlier, better aggregation of and visibility into demand data Enables meaningful dialogue between merchants and vendor prior to market by providing clustering information, classification plans, units and dollars Higher out of the box shippable Production can be reconciled to demand 2-3 weeks earlier Additional revenue opportunities can be identified and acted upon Less excess inventory liquidation Improved customer service levels Single view of the truth: Real-time buying activity is visible to vendor and retailer management at various levels of detail Orders received 1 – 4 weeks earlier Our vendors benefit in similar ways by implementing these systems and processes, in terms of visibility, real-time access to information, better communication and a streamlined process In addition, these collaborative processes greatly improve their inventory management: the aggregation of and visibility into demand data throughout the process is critical! Vendors are able to get retailer demand data earlier in the process They can generate a real-time comparison of corporate wide demand to production instantaneously, down to the size level The information can then be leveraged to modify production schedules & make better inventory decisions This demand visibility results in higher fill rates and reduced excess inventory Furthermore, earlier insight into demand enables vendors to identify additional revenue opportunities and act on them in a timely manner

58 Business Discovery meeting is essential Develop a front end agreement
Success Factors Business Discovery meeting is essential Develop a front end agreement Establish goals and objectives Involve responsible business functions: MIO, Merchant Executive, Sales Executive Define resource involvement and commitments, e.g. Senior IT executive sponsor Establish ground rules for resolution Share proposed timeline Guidelines for making this work: The optimal collaborative assortment planning process begins with the creation of internal and external collaboration arrangements. Each organization specifies and documents the processes, timelines and systems that will be implemented. In additional to internal arrangements, retailers and vendors determine and document the methods and timing of the collaboration for each of their trading partner relationships. Partners agree upon the critical path to successful assortment execution, and collaboration calendars are formed. The agreed upon frameworks are documented and communicated throughout the organizations to all involved parties. The optimal collaboration arrangements include a great amount of detail, such as a definition of terms, designated roles and responsibilities, specified timelines, rules and legal implications, and metrics for success. For example, the arrangement should specify what, when and how financial planning information will be exchanged.

59 Industry standards minimize cost and complexity
Success Factors Industry standards minimize cost and complexity Executive Sponsor drives business results Mutually defined measurements are essential Frequent milestone meetings Engage both organizations at all levels Anticipate the “bumps” Don’t underestimate change management To the extent possible, you should deploy “industry standards” practices from organizations such as VICS so that complexity and costs are minimized as you add new trading partners It is absolutely critical to have senior management level buy-in as well as regular feedback meetings to understand what’s working and what isn’t working. The collaboration arrangement should be treated as a formal trading partner agreement. Make sure that you have clearly defined and documented metrics and terms - even if objectives are aligned across trading partners, differing assumptions and inputs can lead to dramatically different results. The goal is for the retailer and the vendor to evolve into a mutually beneficial joint business plan Depending on how advanced your assortment planning practices are, you may need to engage a third party business process consultant to assist with change management. Every buyer in your organization may have established their own assortment planning process - don’t underestimate the level of education, training, and controls required to execute the new best practices approach successfully.

60 Barriers to Collaboration
Process definition & compliance Disparate data Dirty Data Multiple information flows Inter-functional or inter-company TRUST Tools not used as intended or used at all Personnel are not aligned to the customer focus (process, priority, rewards)

61 Opportunities Realized Through Collaboration
Re-engineered, streamlined processes that are cross functional and cross company Trust is built across the trading partner relationship re-enforcing the process effectiveness (speed), information transparency nd innovation Clean data that can be used without explaining why it needs reconciling and business processes that keep it clean. “one version of the truth” Consolidated information that is transparent and visible – expedites decision making (order vs. forecast cut plan) Realize the use of common, widely used tools that deliver the data/information needed.

62 CPFR® Model

63 CPFR® Certification Program
The overall objective is to provide a strong grounding in the foundational elements of CPFR that VICS, the leading and most knowledgeable organization around the globe, has developed over the last 8 years. This will position those who successfully complete the program to advance to the electives leading to the advanced cap stone program.

64 CPFR® Certification Program Benefits
Learn how collaboration will lead to increased profits, reduced costs and improved efficiency Find out how CPFR provides thorough, accurate information that improves decision making Identify specific areas of opportunity to reduce costs and improve customer service Leverage CPFR best practices within existing initiatives, such as demand management or visit

65 CPFR® Certification Program
Session I – Change Management, facing the resistance The first and foremost barrier to the implementation of collaborative business practices is resistance to change. This barrier exists within departments, divisions, companies, trading partners and practically every business entity. Therefore it is important to recognize these barriers and how to go about transformation, i.e. getting an organization to change. Every one has the responsibility to act as a change agent within their company and this program, led by an expert in change management, will provide well developed and tested suggestions that will lead to success.

66 CPFR® Certification Program
Session II – Setting the stage, getting ready to begin Another important lesson learned through the VICS CPFR Committee is that to be able collaborate with trading partner, either up stream or down stream, it is critically important to be able to collaborate internally. In order to do so, a company must have an understanding of its strengths and weaknesses. To that end, the VICS self assessment and trading partner assessment will be presented and suggestions for how to effectively use these tried and tested tools

67 CPFR® Certification Program
Session III – Benefits determination Any program must be able to show a return on investment, to be able to be financially justified to senior management. This session is designed to provide a strong business case for collaboration, to include a CPFR ROI Calculator. Proven to be effective, it will calculate the expected benefits to be realized by suppliers and retailers, This session will also provide participants to determine how their metrics compare to other companies in their competitive set, a most interesting and valuable exercise.

68 CPFR® Certification Program
Session IV – Data Synchronization – Best practices & protocols The importance of clean data cannot be understated, or the adherence to data standards. In order to be able to collaborate, to scale collaboration, a company must address the accuracy of their data. This session will deal with the questions of data standards, data synchronization, data registry, important communication standards and essential business practices and measurements. It is impossible to successfully collaborate unless basic business practices are performed flawlessly.

69 CPFR® Certification Program
Session V – The CPFR model – from Pilot to profit There are several CPFR models that can be chosen from depending upon technology employed, organizational skills and the ability to accept and process data. This session will delve into these several models, to include Store and Distribution Center CPFR, benefits and requirements for their implementation. The original 9 step CPFR model and the recently developed CPFR model will be discussed, speaking to the attributes of each. This session includes fundamental that are essential to understanding collaboration. Several case studies will be presented highlighting the benefits and collaborative approaches that were taken by each company.

70 CPFR® Certification Program
Session VI – On-boarding and roles/responsibility matrix Successful CPFR initiatives are dependent upon a clear understanding of responsibilities that exist between trading partners. The process, information flows, exception processing and expectations must receive the commitment and the necessary resources to sustain the program. Ongoing and effective communications must be an important element of a structured program that ensues continuity, immediate alerts and understandable remedies.

71 Summary Collaboration was Important
Collaboration is Now Mission Critical Emergence of the “Collaborative Culture” Extended Supply Chains Cannot Tolerate Silos Organization Silos Informational Silos Cultural Silos Global Collaborative Commerce is Now a Necessity


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