Presentation on theme: "CPFR® Overview BISG Board Meeting November 20, 2003"— 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 DynamicsCollaborative Commerce BarriersCPFR® Process ModelCPFR® BenefitsGlobalization of CPFR®VICS & VICS CPFR® CommitteesStandards Enable Collaborative Commerce
3 Collaborative Commerce Dynamics Brings the supply chain closer to the consumerFocus on what mattersFocuses attention on exceptionsMandates reconciliation of exceptionsSupply constraints are realForecasts are constrained by supplier’s capacityPredicting demand in a vacuum is difficultFacilitates flexible relationshipsPartnership in order to succeed
4 Collaborative Commerce Initial Paradigm Shifts Greater sharing of data and responsibilityCommon goals and metricsForecasts aligned, & time phased across supply chainManaged by shared exception criteriaCommitted forecast ---> frozen ordersPre-notification of issues in meeting consumer demandCapitalize on trading partner strengths, resources & systems > 4 CPFR® scenarios
5 Barriers to Collaboration Internal AlignmentSilo MentalitySilo CompensationNot Invented here mentalityBusiness Practices Out of Sync With RealityLegacy SystemsPersonal Comfort ZonesLack of LeadershipUninformed Opinions
6 CPFR® DefinitionA 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)Webster's definition: Act of working together as in writing a book. Cooperating with the enemy.
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 Benefitsof Collaboration.Visibility & focus on sources not symptoms ofsupply chain inefficiencies.Beginning of Collaborative Value Creation
8 The CPFR® Process Model SellerCollaborative PlanningFRONT END AGREEMENTOnceJOINT BUSINESS PLANQtr.Collaborative ForecastingCREATE SALES FORECASTIDENTIFY EXCEPTIONSRESOLVE EXCEPTIONSWk, MoCREATE ORDER FORECASTIDENTIFY EXCEPTIONSRESOLVE EXCEPTIONSBuyerWk, MoGENERATE ORDER
11 CPFR® ROI Benefit Categories Where do the Benefits Come From?Inventory %Storage Costs %Inventory Expense %Intransit inventory for Rail >1%Reduced 3’rd Party Storage %Sales Benefits %Increased Sales %Improved Margin %Customer Retention %Process Efficiencies 6%Inventory Control %Logistics %Order Management / CSR 2%Purchasing >1%Transportation %Carrier Management >1%Load Planning >1%Truck Tendering/Carrier Selection 1%Truck Cycle Time %Rail Cycle Time %Demurrage >1%Excess Freight Charges %JoeThese came from Arena Consulting’s work with TransoraTotal Benefit 100%
12 Real World ROI Examples FirmsCustomer ServiceInventoryForecastAMR RetailersSummarySales +6 to 20%Store Inv down 10 to 40%AMR SuppliersShipment +2 to 10%Del. Cycle cut 10 to 40%Metro/HerlitzIn Stock + 50%Sales +4%Down 15%Canadian Tire/25 SuppliersSales +30%Fill Rate +1%Down 10%ImprovedSainsbury/NestleIn Stock + 30%Supplier Fill +24%Exp/Short Sav. £ 2.8 MillionTruValue/ SuppliersSales +10 to 20%Logistics Saving 10 to 30%Ace/MancoSales +12%Improved 10%Tesco/ P&GIn Stock 100%DC Stock -75%Conad/BarillaItem Sales +167%85% Accuracy
13 The Globalization of VICS/GCI CPFR® Benelux - 3Delhaize le LionRoyal AholdVandemoorteSpainEroskiEurope - 28Asia - 7Americas - 70SwitzerlandNestleCanada - 2Canadian TireRONADenmark - 2HeinekenDanskUK - 11ArgosASDAHasbroJ. SainsburyKingfisherLever-Faberge UKSomersfieldSuperdrugTescoUnilever UKWoolworth’sTaiwanCMCMexicoGroupo ElektraFrance-2CarrefourChanelArgentinaUnileverGermany - 4BayerHenkelHerlitzMetroJapan - 3KaoPanasonicYKKItaly - 2ConadBarillaIsrael - 2SupersolTruvaHong KongJuscoUSA – 66 FirmsA&P Ace Hardware Albertson’s Ashley Furniture Bell SportsBest Buy Binney & Smith Black & Decker Broyhill Colgate-PalmoliveCompaq CVS Delta Faucet Do It Best Eastman ChemicalsEckert Eli Lilly Federated Flowers Bakeries Fuji Film USAGE Appliances Harley-Davidson Hasbro H.E. Butt Hewlett-PackardHome Depot Inland Paperboard International Paper J.C. Penney John DeereJohnson&Johnson Kimberly-Clark Kraft Lane LeviLiquid Nails Liz Claiborne Manco Mars Master LockMeijer Merial Mitsubishi USA Nelson New BalancePacific Coast Feather Pharmavite PlumbPak Procter & Gamble Ralston PurinaRite Aid Saks Sara Lee Schering-Plough Sears & RoebuckSports Authority Staples Super Valu Target TaylormadeTru Value Hardware Walmart Walgreen’s Warner-Lambert Wicke’s FurnitureJapanese PresentationDeleted ? Next to JapanAdded from Storch August Presentation and updated. Complements Ahold global map presented earlier.
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 TrillionParticipation 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, andEducation and PublicityCheck Committee
16 VICS CPFR® Committee Work So Far. What about your firm?CTM Ver 1.020042003Global CPFR® guidelines publishedB2B marketplaces offer CPFR® services20022001First CPFR® rolloutRoadmap to CPFR® published, withpilot resultsLeading CompaniesPilot CPFR®20001999VICS CPFR® Guidelines published19981997VICS subcommittee develops CPFR®1st “CFAR” pilot1996
17 VICS Enables Standards Adoption Standards Enable Collaborative CommerceVICS Enables Standards Adoptione-CollaborationThe 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 productdevelopment6. Collaborative sales & promotion planningYou5. Collaborative logistics management#3 – Item Synchronization – That is where the owner of the data or the supplier of the item information selects all of those trading partners in the community that they wish to expose this information to…creating a binding connection between that supplier, their items, and the receiver of that information, so that anytime an item is added, changed, or de-listed, all of those receiving parties, like the retailers, distribution centers, and transport companies, can get that information near real-time so that all of our databases match.And that is what we do. Develop common standards, register standards-compliant data and synchronize your item information. Once we do these three things, then the really efficient business can happen (which are 4, 5, and 6); we can start collaborating with purchase orders and invoices, pricing and promotion, and vendor managed inventory. Things which can give tremendous return on investment.Additional notes on Step 1 through 8:1. Ensures that all players exchange consistent information2. Ensures that every item in the industry has a unique ID3. Ensures that trading partners are using consistent item information4. Automated exchange of purchase orders, price lists, dispatch notices, invoices, payments, etc.5. Automated exchange of information about product in the supply chain6. Automated exchange of information about future plans & promotions7. Exchange and analysis of information about sales patterns and trends; collaborative product developmente-Collaboration: Final goal… a better way of doing business.4. Collaborative Core Business Transactions - Order, Shipment, Payment.3. Data SynchronizationBenefits2. GLOBALregistryTime / Degree of trust & complexity1. Common data standardsSource: A.T.Kearney for GMA - FMI
18 at the next VICS CPFR® Committee Meeting. Any Questions?Find The Answersat the next VICS CPFR® Committee Meeting.