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CPFR ® Overview BISG Board Meeting November 20, 2003 Joe Andraski, Senior Vice President OMI International.

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Presentation on theme: "CPFR ® Overview BISG Board Meeting November 20, 2003 Joe Andraski, Senior Vice President OMI International."— Presentation transcript:

1 CPFR ® Overview BISG Board Meeting November 20, 2003 Joe Andraski, Senior Vice President OMI International

2 What This Session Covers. Collaborative Commerce Dynamics Collaborative Commerce Barriers CPFR ® Process Model CPFR ® Benefits Globalization of CPFR ® VICS & VICS CPFR ® Committees Standards Enable Collaborative Commerce

3 Collaborative Commerce 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 suppliers capacity Predicting demand in a vacuum is difficult Facilitates flexible relationships Partnership in order to succeed

4 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

5 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

6 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)

7 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


9 CPFR ® Model Planning Forecasting Replenishment Consumer Demand Forecast Replenishment Forecast

10 CPFR ® Value Proposition Increased Sales Reduced Operations Cost Reduced Inventory Improved Relations Improved In-Stock Shared insights to Demand Seasonality/Regionality Promotional Causality Lower Product Returns Reduced Expediting Costs Optimized Production Cycles Less Just-In Case Stock Build to Order vs. Build to Stock Jointly solve problems vs. blaming other party Value DeliveryCPFR ® Driver Source: © E3 Corporation

11 CPFR ® ROI Benefit Categories Inventory 41% Storage Costs 22% Inventory Expense 17% Intransit inventory for Rail >1% Reduced 3rd Party Storage 13% Process Efficiencies 6% Inventory Control 1% Logistics 2% Order Management / CSR 2% Purchasing >1% Sales Benefits 34% Increased Sales 25% Improved Margin 1% Customer Retention 8% Transportation 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% Total Benefit 100% Where do the Benefits Come From?

12 Real World ROI Examples FirmsCustomer ServiceInventoryForecast 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/HerlitzIn Stock + 50% Sales +4% Down 15% Canadian Tire/ 25 Suppliers Sales +30% Fill Rate +1% Down 10%Improved 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% Improved Ace/MancoSales +12%Improved 10% Tesco/ P&GIn Stock 100%DC Stock -75%Improved 10% Conad/BarillaItem Sales +167%85% Accuracy

13 The Globalization of VICS/GCI CPFR ® UK - 11 Argos ASDA Hasbro J. Sainsbury Kingfisher Lever-Faberge UK Somersfield Superdrug Tesco Unilever UK Woolworths France-2 Carrefour Chanel Benelux - 3 Delhaize le Lion Royal Ahold Vandemoorte Spain Eroski Denmark - 2 Heineken Dansk Canada - 2 Canadian Tire RONA Germany - 4 Bayer Henkel Herlitz Metro Switzerland Nestle Mexico Groupo Elektra Hong Kong Jusco Japan - 3 Kao Panasonic YKK Israel - 2 Supersol Truva Argentina Unilever USA – 66 Firms A&PAce Hardware Albertsons Ashley FurnitureBell Sports Best BuyBinney & SmithBlack & Decker BroyhillColgate-Palmolive CompaqCVSDelta FaucetDo It BestEastman Chemicals EckertEli LillyFederatedFlowers BakeriesFuji Film USA GE AppliancesHarley-DavidsonHasbroH.E. ButtHewlett-Packard Home DepotInland PaperboardInternational PaperJ.C. PenneyJohn Deere Johnson&JohnsonKimberly-ClarkKraftLaneLevi Liquid NailsLiz ClaiborneMancoMarsMaster Lock MeijerMerialMitsubishi USANelsonNew Balance Pacific Coast FeatherPharmavitePlumbPakProcter & GambleRalston Purina Rite AidSaksSara LeeSchering-PloughSears & Roebuck Sports AuthorityStaplesSuper ValuTargetTaylormade Tru Value Hardware WalmartWalgreensWarner-Lambert Wickes Furniture Europe - 28Americas - 70 Asia - 7 Italy - 2 Conad Barilla Taiwan CMC

14 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

15 VICS CPFR ® Committee Advisory Board Working Committees; Metrics, Business Process, Technology, N-Tier, CTM, and Education and Publicity

16 VICS CPFR ® Committee Work So Far. 1996 1997 1998 1999 2000 2001 1 st CFAR pilot VICS subcommittee develops CPFR® VICS CPFR ® Guidelines published First CPFR ® rollout Roadmap to CPFR ® published, with pilot results Leading CompaniesPilot CPFR ® Global CPFR ® guidelines published B2B marketplaces offer CPFR ® services 2002 2003 2004 What about your firm? CTM Ver 1.0

17 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… 2. GLOBALregistry 3. Data Synchronization 4. Collaborative Core Business Transactions - Order, Shipment, Payment. 5. Collaborative logistics management 6. Collaborative sales & promotion planning 7. Collaborative product development 1. Common data standards e-Collaboration Time / Degree of trust & complexity Benefits You Source: A.T.Kearney for GMA - FMI Standards Enable Collaborative Commerce VICS Enables Standards Adoption

18 Any Questions Find The Answers at the next VICS CPFR ® Committee Meeting.

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