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The New Model of

CPFR
Joe Andraski,
President and CEO
VICS

Internal Collaboration
Enterprise
Evolution

Finance &
Admin
Logistics &
Distribution

Sales &
Marketing
Real-Time

Customer
Engineering
& R&D

Functional
business processes

Decision
Support

Manufacturing

Procurement
& Suppliers

Internal functional
optimization
Source: Surgency
2005 VICS. All Rights Reserved.

External Collaboration
Raw
Materials
Provider
Intermediate
Manufacturer

Demand Chain

Service
Provider
Raw Material
Suppliers
Real-Time

Manufacturer

Collaboration
Collaboration
Supply Chain

Consumer
Decision
Intermediate Support
Manufacturers/
Suppliers

Distributor

Retailer

Retailers

Distributors

Manufacturers/
Suppliers

Serial relationships
Enterprise optimization focus
Source: Surgency
2005 VICS. All Rights Reserved.

The
OLD 9Step
CPFR
Model

2005 VICS. All Rights Reserved.

Why Change CPFR?


To achieve critical mass
To deal with challenges CPFR programs
have faced:

Process scalability
Perception of complexity
Resource requirements
Migration path from existing processes
Interoperability

To better respond to the needs of


companies who want CPFR subsets
2005 VICS. All Rights Reserved.

Goals for the New Model


An executable framework directly
implementable
Simple to understand
Clearly defined alternatives for common
CPFR scenarios

Retail event (promotion) collaboration


DC replenishment collaboration
Store-level collaboration
Collaborative assortment planning

Supporting case studies, methodology and


tools

2005 VICS. All Rights Reserved.

Updated CPFR Model

2005 VICS. All Rights Reserved.

Base CPFR Model

Buyer

Seller

End
Customer

2005 VICS. All Rights Reserved.

Retail CPFR Model

Retailer

Manufacturer

Consumer

2005 VICS. All Rights Reserved.

N-Tier CPFR

Adds the
Supplier

2005 VICS. All Rights Reserved.

CPFR and the


Collaborative Commerce Model
The four CPFR Collaborative Activities correspond to the
top four steps of the GCI Collaborative Commerce Model.

Analysis
Strategy &
Planning
Demand & Supply
Management
Execution

2005 VICS. All Rights Reserved.


CPFR

Scenarios

Scenario

Applicability

Industry Segment

Retail Event
Collaboration

Highly-promoted
All (except EDLP)
channels or categories

DC
Replenishment
Collaboration

Retail DC distribution

Drug chain
Hardware
Grocery

Store-Level
Collaboration

Direct store delivery


or cross-docked
distribution

Mass merchant
Club store
DSD grocery

Collaborative
Assortment
Planning

Apparel and seasonal


goods

Department store
Specialty retail
2005 VICS. All Rights Reserved.

The New CPFR Model:


Key Elements

Collaboration Activities (4)

Collaboration Tasks (8)

CPFR Scenarios (4)

Collaboration Role Alternatives (4)

2005 VICS. All Rights Reserved.

4 Collaboration Activities
1.

2.

Strategy &
Planning
Demand &
Supply
Management

3.

Execution

4.

Analysis
2005 VICS. All Rights Reserved.

Strategy & Planning

Establish the
ground rules
for the
relationship
Determine
product mix,
placement
Develop
event plans
for the
period
2005 VICS. All Rights Reserved.

Demand & Supply Management

Project
consumer
(point-ofsale)
demand
Calculate
order and
shipment
requirement
s over the
planning
horizon
2005 VICS. All Rights Reserved.

Execution

Place orders,
prepare and
deliver
shipments
Receive and
stock
products
Record sales
transactions
and make
payments
2005 VICS. All Rights Reserved.

Analysis

Monitor
exception
conditions
Calculate key
metrics
Share product
and market
insights
Adjust plans,
processes for
continuous
improvement
2005 VICS. All Rights Reserved.

8 Collaboration Tasks
1.

2.
3.
4.
5.
6.
7.

8.

Collaboration
Arrangement
Joint Business Plan
Sales Forecasting
Order Forecasting
Order Generation
Order Fulfillment
Exception
Management
Performance
Assessment
2005 VICS. All Rights Reserved.

Collaboration Role Alternatives


Sales
Forecasting

Alternative
A: Conventional Order
Mgt.
Retailer

Order
Forecasting

Order
Generation

Retailer

Retailer

B: Supplier-Managed
Inventory

Retailer

Manufacturer

Manufacturer

C: Co-Managed
Inventory

Retailer

Retailer

Manufacturer

D: Retail VMI

Manufacturer

Manufacturer

Manufacturer
2005 VICS. All Rights Reserved.

Manage the Entire Supply Chain


with Supplier Collaboration
Raw
Materials
Provider
Intermediate
Manufacturer

Demand Chain

Manufacturer

Distributor

Supply Chain

Retailer

2005 VICS. All Rights Reserved.

Collaborate with Key Suppliers

Strategic Suppliers

Demand Forecasts

Long-Lead

Promotion Plans

Components

New Product

Development

Packaging
Suppliers

Production Plans

80/20 Rule

Performance
Measures
2005 VICS. All Rights Reserved.

Measure, Measure, Measure


Performance
Area
Inventory

Performance Metric
Finished Goods, Materiel

Forecast Accy

Sales forecast, Order Forecast, Materiel Forecast

Service Level
Lead-Time

Production, Delivery, Out-of-stock (OOS)


Frequency
Order-Delivery, Order-Production

Unplanned
Changeover
Obsoletes

Promotion Plan, New Product Intro, Production


Plan, Rush Orders
Obsoletes

Sales

Sales Growth

Data Synch.

Invoice Accuracy

Distribution

Full Truck, Vehicle Fill, Empty Running, Dist. Costs

Planning

Promotion Effectiveness, Material, Production,


Capacity,
Transportation
Source: www.cpfr.org
2005 VICS. All Rights Reserved.

Collaborate Holistically

All Trading Partners Must Remain


Profitable
Companies that Changes Must Get
Benefits from the Change
Gain Visibility, Measures of Entire
Supply/Demand Chain
2005 VICS. All Rights Reserved.

Key learning

Education
Change/Transformation Mgt
The Language of the CEO
Clean data
Category Management
Forecasting

2005 VICS. All Rights Reserved.

? ? Questions ? ?
Thank You,
jandraski@vics.org