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©2005 VICS. All Rights Reserved. Jim McLaughlin Past Chair VICS CPFR Committee AA&FA – Information Systems Committee Meeting October 19, 2006 Collaborative.

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Presentation on theme: "©2005 VICS. All Rights Reserved. Jim McLaughlin Past Chair VICS CPFR Committee AA&FA – Information Systems Committee Meeting October 19, 2006 Collaborative."— Presentation transcript:

1 ©2005 VICS. All Rights Reserved. Jim McLaughlin Past Chair VICS CPFR Committee AA&FA – Information Systems Committee Meeting October 19, 2006 Collaborative Commerce …. from a VICS perspective

2 ©2005 VICS. All Rights Reserved. Topics VICS & CPFR Background VICS & CPFR Background Recent Research on Collaborative Commerce Adoption Recent Research on Collaborative Commerce Adoption Accenture CPFR Survey Results Accenture CPFR Survey Results Best Practice Best Practice Retailer & Vendor Benefits Retailer & Vendor Benefits Success Factors Success Factors Barriers & Opportunities Barriers & Opportunities CPFR Certification Program CPFR Certification Program

3 ©2005 VICS. All Rights Reserved. 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. 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 ©2005 VICS. All Rights Reserved. VICS Overview 230+ Member Companies 230+ Member Companies Observing 20 years of Industry Defining Standards & Guidelines Observing 20 years of Industry Defining Standards & Guidelines Retailers, Manufacturers, Transportation Services, Service Providers & Standards Organizations Retailers, Manufacturers, Transportation Services, Service Providers & Standards Organizations Software Products Software Products Consulting Consulting EPC Global EPC Global NRF NRF GS1 GS1 AA&FA AA&FA All Work is Conducted by Volunteers All Work is Conducted by Volunteers

5 ©2005 VICS. All Rights Reserved. VICS Committees Apparel and Footwear, RFID/EPC Committee Apparel and Footwear, RFID/EPC Committee Collaborative Planning, Forecasting & Replenishment (CPFR®) Collaborative Planning, Forecasting & Replenishment (CPFR®) VICS E-Collaborative Commerce Initiative VICS E-Collaborative Commerce Initiative Hardlines Data Synchronization Committee Hardlines Data Synchronization Committee General Merchandise & Apparel Data Synchronization Committee General Merchandise & Apparel Data Synchronization Committee Floor-Ready Merchandise Committee Floor-Ready Merchandise Committee Logistics Committee Logistics Committee Retail Out-of-Stocks Committee Retail Out-of-Stocks Committee

6 ©2005 VICS. All Rights Reserved. VICS Committees Apparel and Footwear, RFID/EPC Committee Apparel and Footwear, RFID/EPC Committee Collaborative Planning, Forecasting & Replenishment (CPFR®) Collaborative Planning, Forecasting & Replenishment (CPFR®) VICS E-Collaborative Commerce Initiative VICS E-Collaborative Commerce Initiative Hardlines Data Synchronization Committee Hardlines Data Synchronization Committee General Merchandise & Apparel Data Synchronization Committee General Merchandise & Apparel Data Synchronization Committee Floor-Ready Merchandise Committee Floor-Ready Merchandise Committee Logistics Committee Logistics Committee Retail Out-of-Stocks Committee Retail Out-of-Stocks Committee

7 ©2005 VICS. All Rights Reserved. VICS CPFR® Committee Mission – Develop guidelines an roadmaps for various collaborative scenarios, which integrate demand and supply planning and execution 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 Continue to improve on existing guidelines, tools and critical first steps that enable CPFR implementation

8 ©2005 VICS. All Rights Reserved. VICS CPFR® Committee Implementation….Implementation…. Implementation….Implementation….Implementation Sub Committees reflect our focus Sub Committees reflect our focus Content & ExecutionContent & Execution Metrics (Adoption & Operational)Metrics (Adoption & Operational) Internal CollaborationInternal Collaboration Education/CertificationEducation/Certification Apparel & FootwearApparel & Footwear

9 ©2005 VICS. All Rights Reserved. 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.. 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 ©2005 VICS. All Rights Reserved. CPFR® for Apparel and Footwear Subcommittee Mission – Identify, develop and document standardized collaborative processes for Apparel & Footwear industries, leveraging proven VICS concepts. 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 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 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. Who should join – Senior managers who understand the organization’s planning, forecasting and execution business processes. Contact – or Contact – or

11 ©2005 VICS. All Rights Reserved. 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

12 ©2005 VICS. All Rights Reserved. Isolated Companies Remain Inefficient Supplier Buffer Inventory Buffer Inventory Unexpected orders Unexpected orders Short lead time pressures Short lead time pressures Unknown Demand Variables Unknown Demand Variables New stores New stores Retailer promotions Retailer promotions Retailer stock status Retailer stock status Item transitions Item transitions Assortment changes Assortment changes Retailer Buffer Inventory Buffer Inventory Short shipments Late shipments Poor Promotional Forecasts Poor Promotional Forecasts No prior history Little consumer research New Items New Items Limited market research © E3 Corporation

13 ©2005 VICS. All Rights Reserved. The Next Competitive Advantage: Collaborative Commerce 2004: Collaborative Commerce 2001: CPFR 1996: ECR 1992: VMI/Co-Managed 1986: Quick Response (QR) 1960s: Just-In-Time/Total Quality

14 ©2005 VICS. All Rights Reserved. What is Collaborative Commerce? It is the Inter-Enterprise business relationship and partnership consensus 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 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 It promotes mutual supply chain visibility and optimization of cross functional processes

15 ©2005 VICS. All Rights Reserved. Next Step in Supply Chain Evolution Collaboratively Integrating Demand on An End to End Basis CPFR ®  Single Shared Consumer Demand & Order Forecasts MANUFACTURER SUPPLY LOGISTICSRETAILCONSUMER Single Shared Order Fulfillment Forecast Removing the Walls Between trading partners

16 ©2005 VICS. All Rights Reserved. Next Step in Supply Chain Evolution Collaboratively Integrating Demand on An End to End Basis CPFR ®  Single Shared Consumer Demand & Order Forecasts MANUFACTURER SUPPLY LOGISTICSRETAILCONSUMER Single Shared Order Fulfillment Forecast Removing the Walls Between trading partners

17 ©2005 VICS. All Rights Reserved. Collaborative Commerce Based on Aligning Supply and Demand Trading partners share forecasts and other supply chain data over the Internet. Trading partners share forecasts and other supply chain data over the Internet. CPFR ® technology identifies exception conditions when: CPFR ® technology identifies exception conditions when: Plans do not match Plans do not match Forecast accuracy is out of tolerance Forecast accuracy is out of tolerance Overstock and understock conditions exist Overstock and understock conditions exist Partners resolve exceptions through negotiation and plan revisions. Partners resolve exceptions through negotiation and plan revisions. CPFR ® is a collaborative PROCESS approach to increasing product availability while reducing inventory across the supply chain.

18 ©2005 VICS. All Rights Reserved. CPFR ® Prepares Industry for Collaborative Commerce Collaborative Collaborative Planning Planning Forecasting Forecasting Replenishment Replenishment

19 ©2005 VICS. All Rights Reserved. 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)

20 20 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. More Specifically… Supply Chain Collaboration: What’s happening?

21 21 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. More Specifically… Supply Chain Collaboration: What’s happening? A Collaborative Study on the Progress of Collaborative commerce

22 22 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 Who Collaborated to perform this Study ?

23 23 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential.  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 About this Study…..

24 24 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential.  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 Some findings….

25 25 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. Antecedents Collaboration Consequences A Model of Supply Chain Collaboration

26 26 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 A Model of Supply Chain Collaboration

27 27 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. Strategic intentCapability-based function integration Internal alignmentProcess mapping Streamlining internal operation Relationship orientationOngoing Relational Long-term oriented Relationship-specific Time investmentPersonal Employee training Physical resources Information technology Information flowFree flow of information and communication FormalizationPerformance metrics Goals and objectives Roles/responsibilities, and reporting Collaborative planning and scheduling Collaborative technology Type of shared information What to Consider Before You Begin

28 28 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 A Model of Supply Chain Collaboration

29 29 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 Key Collaborative Activities

30 30 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 A Model of Supply chain Collaboration

31 31 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. MutualityMutually beneficial and synergistic EfficiencyCost reduction Reduced inventory Shortened lead-time Streamlining supply chain process EffectivenessImproved customer service Increased market share Better pricing New product development ProfitabilityReturn on investment Sales per target segment Reinforcement and expansionTrust of the relationshipCommitment Interdependency Mutual involvement Outcomes of Collaboration

32 32 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 A Model of Supply chain Collaboration

33 33 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. Closing Thoughts…  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 35 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 36 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 37 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 38 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 39 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 40 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 41 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 42 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 43 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 44 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 45 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 2006 manufacturers are expected to increase IT spending especially their collaborative technology spending - Forrester Research, November 2005

46 46 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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. Have not Identified Right Partner Performance not easily Measured Technology and data hurdles Unclear Value Proposition Concerns about Data Security Lack of trust Cultural/behavioral Which one of the following is the greatest barrier to collaborating with your trading partners?

47 47 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 48 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. Cost reduction benefits continue to be a top driver for collaborative activities and the desire to build strategic relationships is stronger. Stronger Strategic Relationships Cost Reduction /Savings Increased Sales / Top Line Growth Where have net benefits been realized as a result of collaborating with your trading partners?

49 49 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 50 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 51 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 52 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 53 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 54 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 55 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. Kurt Salmon Assoc. & 7 th 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 56 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 Improved planning, better product assortments on the selling floor, and ultimately higher sales

57 57 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential.  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 Collaborative Planning Best Practices: Vendor Benefits

58 58 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential.  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 Success Factors

59 59 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential.  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 Success Factors

60 60 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 61 Copyright © 2006 Accenture All Rights Reserved. Copyright 2006 Accenture. All rights reserved. Proprietary and confidential. 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 ©2005 VICS. All Rights Reserved. CPFR ® Model

63 ©2005 VICS. All Rights Reserved. CPFR ® Certification Program 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. 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 ©2005 VICS. All Rights Reserved. Learn how collaboration will lead to increased profits, reduced costs and improved efficiency 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 Find out how CPFR provides thorough, accurate information that improves decision making Identify specific areas of opportunity to reduce costs and improve customer service Identify specific areas of opportunity to reduce costs and improve customer service Leverage CPFR best practices within existing initiatives, such as demand management Leverage CPFR best practices within existing initiatives, such as demand management CPFR® Certification Program Benefits CPFR® Certification Program Benefits or visit

65 ©2005 VICS. All Rights Reserved. CPFR® Certification Program 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 ©2005 VICS. All Rights Reserved. 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 CPFR® Certification Program CPFR® Certification Program

67 ©2005 VICS. All Rights Reserved. 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. CPFR® Certification Program CPFR® Certification Program

68 ©2005 VICS. All Rights Reserved. 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. CPFR® Certification Program CPFR® Certification Program

69 ©2005 VICS. All Rights Reserved. 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. CPFR® Certification Program CPFR® Certification Program

70 ©2005 VICS. All Rights Reserved. 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. CPFR® Certification Program CPFR® Certification Program

71 ©2005 VICS. All Rights Reserved. Summary  Collaboration was Important  Collaboration is Now Mission Critical  Emergence of the “Collaborative Culture”  Extended Supply Chains Cannot Tolerate Silos Organization Silos Organization Silos Informational Silos Informational Silos Cultural Silos Cultural Silos Global Collaborative Commerce is Now a Necessity


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