Introducing - CPFR 2.

0
Delight Customers and Maximize
Performance
Inez Blackburn
Ron Ireland
Jim Matthews
May 20, 2014

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GS1 US ANTITRUST CAUTION

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and not mandatory.

Please review the complete GS1 US antitrust policy at

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INTRODUCING

• Inez Blackburn
• Ron Ireland
• Jim Matthews

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 AGENDA

1
New 2
World CPFR
Order The Good
Collaboration The Bad
The Opportunity
4
The CPFR 2.0
3
CPFR
The Business
Case for Change

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 THE ACCEPTANCE AND USE OF TECHNOLOGY IS
CHANGING THE WAY CONSUMERS INTERACT, OBTAIN
INFORMATION AND PURCHASE ITEMS

28.7% of the world 5.3 billion mobile U.S. mobile commerce

is online subscriptions WW reaches $1.2 billion
1.96 billion people are online 940 million subscriptions to 3G Global mobile commerce sales
today and this number is estimated services expected to reach $163 billion
to reach 2.4 billion by 2015 by 2015

63% research via 83% of holiday shoppers 500 million active,

social networking
47% of the time they are
influenced by what is read
influenced by reviews 175 million daily users
Consumer reviews are 15x more A ‘Facebook Like’ from a friend
trusted than descriptions from mfg carries the same weight as 100
positive reviews from strangers
Will Stores Survive: Bricks and Mortar in the Age of Mobility and e-Commerce

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5 © 2014 inezblackburn.com
THEN AND NOW

THEN… NOW…
• Big + Odd Looking Machines • (Square)
• Receipt Printers / Cash Drawers • Simple + Elegant Tablet + Square
Reader / Email Receipts / Touch
Signing

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 THEN… NOW…
Desk Tops and Notebooks Tablets and Smartphones

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MICHAEL DELL DID NOT INVENT TRANSISTORS,
COMPUTERS, … BUT HE REVOLUTIONIZED
THE PC INDUSTRY – HOW?

HP: Build To Forecast Dell: Build To Order

Manufacture Demand Demand Manufacture

This business model innovation not thinkable without collaboration and

cooperation across the supply chain

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ZARA’S COLLABORATIVE BUSINESS MODEL IS
REVOLUTIONIZING FASHION RETAILING

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 APPIFICATION OF SOCIAL MEDIA
HELP ME, HELP YOU, HELP OTHERS…
Waze Jawbone UP Yelp
• 30MM Users, +3x • Initial Launch of ~70K • 84MM Users, +37% Y/Y
Y/Y Users (11/11) = • 33MM User-Generated
• 600MM+ Miles • 7B+ Steps Reviews, +49% Y/Y
Driven per Month • 800 Years of Sleep
with Waze Open • Re-launched 11/12

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SOCIAL MEDIA AND THE SUPPLY CHAIN -
TWEETS ABOUT OPEN SHIPMENTS

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SUPPLY CHAIN DISCUSSION

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NEW BUSINESS MODELS—ALL TAKING ADVANTAGE OF
EMERGING TECHNOLOGY

EXISTING PRODUCTS/TECHNOLOGY EXISTING MARKET NEEDS

Business Model Innovation

• Finding new ways to interact with consumers and learn
• Finding new ways to develop products & solutions
• Finding new ways to match supply to demand
• Finding new ways to distribute products and services
• Finding new ways to capture value
By improving and changing information flow and thus
reducing risk or allocate it more efficiently

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 THE FUTURE IS NOW!

1. AWARENESS 2. RESEARCH 3. PURCHASE 4. RETRIEVAL / DELIVERY 5. SERVICE / SUPPORT

Social media
Customers have the
Advertising Retailer sites
freedom to achieve their
goals throughout the
shopping process…
Signage Email

Kiosks

Checkouts

Employees SMS/MMS

Catalogs Call centers

…using whichever
channels and touch
Direct mail Texting points they prefer.

Will Stores Survive: Bricks and Mortar in the Age of Mobility and e-Commerce

© 2014 GS1 US ALL RIGHTS RESERVED

14
14 © 2014 inezblackburn.com
CPFR® – The Good The Bad
The Opportunity

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 MISSION OF CPFR 

Change the relationship paradigm between trading partners and create significantly
more accurate information that can drive the value chain to greater sales and profits.

© 2014 GS1 US ALL RIGHTS RESERVED

TPC1320
ORIGINAL CPFR DEFINITION AND OBJECTIVE

CPFR is defined by Collaborative Business Practices that

enable business partners to have visibility into one
another’s critical demand, order forecasts and
promotional forecasts through a systematic process of
shared brand and category plans, exception identification
and resolution

CPFR Objective – Improve efficiencies across the

extended supply chain, reducing inventories, improving
service levels and increasing sales

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 CPFR 9 STEP GUIDELINES

Business Model - Scenario A

• Step 1 – Front-End agreement

Planning
Develop Front-End

– Agree to confidentiality and dispute

1 Agreement

Distributor Business Create Joint Business Manufacturer Business

resolutions
Development Activities 2 Plan Development Activities
– Develop scorecard to track supply
chain metrics
3
Create Sales Forecast
– Establish incentives
Exception Criteria

Exception Criteria
Distributor Manufacturer
Identify Exceptions for
• Step 2 – Joint Business Plan
Exception Triggers Exception Triggers
4 Sales Forecast
Exception
Items – Project team develops plans for
promotions, inventory policy changes,

Constraints
Distributor Decision Resolve / Collaborate On Manufacturer

Forecasting
Support Data Exception Items Decision Support Data

POS
5
new product introductions, store
Data openings and closings
Create Order Forecast
6

• Steps 3 – 5 – Sales forecast collaboration

Manufacturer
Order Forecast Materials &
Production
Frozen Forecast Planning – Trading partners share demand
Distributor
Identify Exceptions for
Constraints
Manufacturer
forecasts and identify exceptions.
Order Forecast
Exception Triggers
7
Exception Triggers Resolutions are collaborated on causal
Exception
Items factors to a single forecast number.
Resolve / Collaborate On Manufacturer
Distributor Decision Decision Support Data
Support Data 8 Exception Items

Consumer Updated Data for

• Steps 6-8 – Order forecast collaboration
Long
Term Short
Exception Items
– Trading partners share replenishment
Term
Order Generation Produce plans, identifying and resolving
Retail Store
9 Order / PO Product
exceptions.
Replenishment

Feedback

Distributor Receiving
Product
Delivery Execution
Order Filling /
Shipment Execution
• Step 9 – Order generation/delivery execution
Order filling feedback
– Results data is shared and forecast
Key :
Distributor Either / Joint Manufacturer
accuracy problems is reviewed.
Activities Activities Activities Performance metrics are accessed.

© 2014 GS1 US ALL RIGHTS RESERVED

 ORIGINAL CPFR MODEL

Business Model - Scenario A

Planning
Develop Front-End
1 Agreement

Distributor Business Create Joint Business Manufacturer Business

Development Activities 2 Plan Development Activities

Create Sales Forecast

3
Exception Criteria

Exception Criteria
Distributor Manufacturer
Exception Triggers
Identify Exceptions for Exception Triggers
4 Sales Forecast
Exception
Items

Constraints
Distributor Decision Resolve / Collaborate On Manufacturer

Forecasting
Support Data Exception Items Decision Support Data
5
POS
Data

Create Order Forecast

6
Manufacturer
Order Forecast Materials &
Production
Frozen Forecast Planning
Constraints
Identify Exceptions for
Distributor Order Forecast Manufacturer
7
Exception Triggers Exception Triggers
Exception
Items

Resolve / Collaborate On Manufacturer

Distributor Decision Decision Support Data
Support Data 8 Exception Items

Updated Data for

Consumer
Exception Items
Long
Term Short
Term
Order Generation Produce
9 Order / PO Product
Retail Store
Replenishment

Feedback

Product Order Filling /

Distributor Receiving Delivery Execution
Shipment Execution

Order filling feedback

Key :
Distributor Either / Joint Manufacturer
Activities Activities Activities

© 2014 GS1 US ALL RIGHTS RESERVED

ORIGINAL CPFR MODEL

CPFR Challenges
• Complexity
• Scalability
• Business case and realizing
desired results
• Emerging Technologies and Apps

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RETAILER AND MANUFACTURER TASKS

Retailer Tasks Collaboration Tasks Manufacturer Tasks

Planning
Vendor Management Collaboration Arrangement Account Planning

Category Management Joint Business Plan Market Planning

Forecasting
POS Forecasting Sales Forecasting Market Data Analysis

Replenishment Planning Order Forecasting Demand Planning

Replenishment
Buying/Re-buying Order Generation Production & Supply Planning

Logistics/Distribution Order Fulfillment Logistics/Distribution

Analysis
Store Execution Exception Management Execution Monitoring

Supplier Scorecard Performance Assessment Customer Scorecard

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THE BULL WHIP EFFECT

Consumer Sales Retailer’s Orders to Manufacturer

20 20
Order Quantity

Order Quantity
15 15

10 10

5 5

TIME TIME

Wholesaler’s Orders to Manufacturer Manufacturer’s Order to Supplier

20 20
Order Quantity

Order Quantity
15 15

10 10

5 5

TIME TIME

S.Hau Lee, Stanford University

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TPC170
YOU NEED TO BE ABLE TO PITCH AND MAKE
THE CATCH

You need to have the skills if you’re going to execute well with others

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© Oliver Wight International
 LIMITED COLLABORATION

Executive Executive
Management Management

Sales / Buyers
Marketing Merchandising

Information Information
Technology Sales Technology
Buyer
Person Finance
Finance

Manufacturing Operations

Deployment
Deployment Warehousing

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© Oliver Wight International
NAA3970
THE BEST OF COLLABORATION

Relationship Management
Relationship Management

Executive Executive
Management Management

Sales / Buyers
Marketing Merchandising

Information Information
Technology Technology

Finance Finance

Manufacturing Operations

Deployment Deployment
Ware-
housing

© 2014 GS1 US ALL RIGHTS RESERVED

© Oliver Wight International
NAA3980
INTEGRATED BUSINESS PLANNING

MANAGEMENT
BUSINESS
REVIEW

STRATEGY
BUSINESSPLAN
PERFORMANCE

SUPPLY PRODUCT
REVIEW MANAGEMENT
REVIEW

DEMAND
REVIEW
Supply Chain Portfolio
Management Management

Supply Point Market Project

Management Management Management

Supplier Demand Resource

Management Management Management

Sales
Management

Procurement Management

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© Oliver Wight International
OWI 0004-03a
The Business Case for Change
and
Introducing CPFR® 2.0

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CASE STUDY - CPFR DELIVERS

Situation:
• High tech industry – multi billion dollar supplier and customer
• Very upset customer, CEO to CEO escalation
• High inventory on some products, various drivers (both supplier and customer)

Action:
• CPFR presentation to customer executives
• Successfully aligned with executives on the problem and the approach to solve it
• Excellent collaboration and full deployment of CPFR

Results:
 38% reduction in inventory in first 4 months
 4 near flawless new product introductions, including bleed off of old stock
 Delighted customer, including executive sponsor touting the success of the
program to customer executives and using this success as justification
for a $1M capital request to expand the initiative

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WHY RE-INVENT AND RE-DEPLOY CPFR

1 Rules of engagement for collaboration have evolved

Building solutions leveraging existing technology and investing

in future technology.

We must more effectively understand problems and choose CPFR

2
solutions that solve those problems quickly

This must be accomplished in a simple and logical way that more easily
secures executive sponsorship and delivers on desired results.

3 Ensure that the Consumer/Shopper remain at the center of the solution

Incentives Rewards and Behaviors must be aligned with a strong business

case for collaboration.

© 2014 GS1 US ALL RIGHTS RESERVED

© 2014 GS1 US ALL RIGHTS RESERVED
 NEW BUSINESS MODELS—ALL TAKING ADVANTAGE OF
EMERGING TECHNOLOGY

EXISTING PRODUCTS/TECHNOLOGY EXISTING MARKET NEEDS

Business Model Innovation

• Finding new ways to interact with consumers and learn
• Finding new ways to develop products & solutions
• Finding new ways to match supply to demand
• Finding new ways to distribute products and services
• Finding new ways to capture value
By improving and changing information flow and thus
reducing risk or allocate it more efficiently

© 2014 GS1 US ALL RIGHTS RESERVED

COLLABORATIVE PLANNING

© 2014 GS1 US ALL RIGHTS RESERVED

COLLABORATIVE FORECASTING

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COLLABORATIVE REPLENISHMENT

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© 2014 GS1 US ALL RIGHTS RESERVED
SUMMARY - CPFR 2.0

• Recognizes and leverages:

• Current and Emerging Technology
• New Consumer Models
• Retail Realities
• Big Data
• Integrated Business Planning

• Addresses CPFR shortcomings:

• Process scalability
• Perception of complexity
• Resource requirements
• Migration path from existing
processes
• Iterative improvements to critical
results

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Q&A

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MORE INFORMATION

To get involved with the workgroup efforts on Collaborative

Planning, Forecasting, and Replenishment, you can email
apparelgm@gs1us.org.

If you want to learn more about CPFR 2.0, there is a one-

day course offered on Monday, June 9th during the GS1
Connect pre-conference education track. For more
information, you can visit
http://www.gs1us.org/resources/gs1-connect-conference.

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CONTACT INFORMATION

Michelle Covey
Director, Industry Engagement
GS1 US

TEL +1 510.387.6999
E M AI L mcovey@GS1US.org
WEB www.GS1US.org/ApparelGM

Connect with the GS1 US community on

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