CPFR: Buzzword or Reality?

CHICAGO (04/24/2000) - At the Retail Systems 2000 conference in Chicago, everyone was talking about collaborative planning, forecasting and replenishment, or CPFR for short. This is the buzzword for online sharing of sales forecast data between buyer and seller for efficient production planning.

But talking about CPFR and actually making use of it are two different things, with companies struggling with pilot projects for years.

Why the difficulty? The first problem is getting upper management to buy into the idea of handing out sensitive corporate data to suppliers, data that could reach competitors if it were passed along. The second issue is a lack of CPFR standards, which means the half-dozen CPFR-style software packages available today can't share data.

Retail industry giant Wal-Mart Stores Inc., which had $165 billion in sales in 1999, started a CPFR pilot project almost three years ago with Sara Lee. While Wal-Mart is somewhat secretive about it, last week the strategic applications manager for the project, Bobbie Aldridge, summarized its progress for the benefit of conference attendees.

It takes considerable time to decide what information the retailer and supplier are comfortable sharing with each other, Aldridge says. "Sometimes we have information about a promotion, and we just can't share it," she says.

In the Wal-Mart/Sara Lee pilot, based on home-grown software from Wal-Mart, information was transmitted using the electronic data interchange 830 transaction set (although CPFR doesn't require use of EDI).

The CPFR Web site that Wal-Mart built combines sales forecasting information with production planning data sent by the supplier, so manufacturing can be adjusted when changes occur. The goal is to cut down on unnecessary inventory stock, or conversely, item shortages that Wal-Mart might face without this type of automated, careful planning.

Aldridge says the CPFR pilot with Sara Lee was shown to work, but with tremendous effort. Wal-Mart plans to involve other companies in CPFR tests, too.

Logility Inc., General Electric Information Services, Syncra Systems Inc., Manugistics and i2 Technologies Inc. each offer their own style of collaborative planning software. But users say none of these packages work well across vendor boundaries. "They're not interoperable," says Scott Williams, senior manager for global e-business development at Proctor & Gamble.

Corporations in the retail industry expect Voluntary Interindustry Commerce Standards (VICS), in Lawrenceville, New Jersey, to eventually establish standards in this area. Ron Griffen, senior chief information officer at The Home Depot and recently named chair of the VICS organization, hinted during his keynote address at the conference that VICS will have more news on that front during the next few months.

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