Since the downturn in tech spending and the demise of Net-based businesses, the luster of Collaborative Planning, Forecasting and Replenishment (CPFR) among retailers seems to have dimmed considerably.
CPFR is still moving ahead, but not at the levels of two years ago during the height of the dot.com frenzy.
"It's pretty hard to get the attention of a CEO focused on this sort of thing today vs. two or three years ago," said Ken Fobes, chairman, Business Strategy Group, Ponte Vedra Beach, Fla.
Retailers are finding that CPFR is resource-heavy, said Fobes.
CPFR requires retailers and grocery/Consumer Product Goods manufacturers to work together and share their data on sales results and forecasted sales. The Internet was hailed as the vehicle to make sharing data a much less complicated process.
"I don't think it's a money issue as much as it's a development issue internally," said Jim Whittaker, director of management support services, Giant Markets, Binghamton, N.Y. "There is a huge move in platform taking place within the stores from the legacy type systems to NT-based systems. Those installations are taking most of the priority right now."
Giant Not Ready
Giant Markets, a 12-store chain, is using Electronic Data Interchange with a few key vendors but has not yet moved into CPFR because of what Whittaker calls "store issues."
"It doesn't matter whether you've got 10 stores or 50 stores, essentially you have to operate on a common platform," said Whittaker. "You want to be able to offer customers the same services, so in a certain sense the stores are actually driving what's done at the back end.
"For example, we have a tremendous push right now to install electronic shelf labels in all the stores. A rollout like that is a very involved project, and it takes preference over some of the other developments we would normally like to get into."
One step leads to another, said Whittaker. Getting the store-level data in place is the first priority before moving on to CPFR.
"You can't go to a vendor and have the vendor provide you with a legacy-type platform that they want you to operate on and then find out that's not what you are going to have in six months," he said.
Fobes agreed that most retailers still operate on a chainwide instead of an individual store basis. "They aren't sophisticated enough to specifically know what should be in which stores and for which customers."
However, he does see retailers shifting toward a more demand-based system using store data rather than the current supply-driven system prevalent in the industry.
"Wal-Mart has been working on that for years -- customizing their actual store assortments to the local area and the local customer base," said Fobes.
Wal-Mart Stores, Bentonville, Ark., has pushed the envelope further than anyone, said Thomas Murphy, Peak Tech Consulting, Colorado Springs, Colo.
"It was a forced collaboration. They said, 'Here's the data -- you better get at it, because if you don't, I'll find somebody else who can,"' said Murphy.
Of course, Wal-Mart pioneered those efforts before it got into the grocery business. Now that it's building supercenters that combine grocery and traditional discount store lines, the pressure is on for other grocery retailers to keep pace.
Rather than develop individual collaborative relationships with each vendor, retailers are looking toward the industry exchanges -- Transora, Chicago, GlobalNetXchange (GNX), San Francisco and WorldWideRetail Exchange , Alexandria, Va.(WWRE) -- as their route to CPFR.
Two key developments for the industry to succeed at CPFR are for the exchanges to act as independent intermediaries and for the establishment of Xtensible Markup Language (XML) to be adopted as a universal standard, said Fobes.
Yet concerns about how the industry can support three exchanges might be keeping companies from moving forward until an expected merger or mergers among them proceed.
Members of GNX have all conducted CPFR pilot programs, said Murphy. "Most are large enough and have extensive enough technology to do that."
WWRE is comprised of nearly 60 companies. "That's a broad range, so I suspect that a smaller percentage of them have not started anything with CPFR," said Murphy.
GNX launched its first CPFR Web-based product, a negotiations tool, in March 2001. Now it is preparing to launch a second tool for collaboration early this year, said CEO Joe Laughlin.
"We've had five separate installations over the past nine months and they have just gone from test stage to 'live' status," said Laughlin. "We expect to add 30 to 40 more installations very soon. We now have 25 companies using the exchange in addition to our eight equity partners."
Through GNX, Sainsbury's, London has been piloting with Kimberly-Clark, Dallas; Metro, Montreal, has been working with Procter & Gamble, Cincinnati; and Carrefour, Paris has been working with Hinkel, a German-based consumer packaged goods company.
"We expect members will be using full CPFR for their most heavily promoted items," said Laughlin. "The system will have a built-in promotions and planning capability. The promotions will be using data six months out."
Outside the exchanges, three U.S. retailers -- H. E. Butt Grocery Co., San Antonio, Wegmans, Rochester and Meijer's, Grand Rapids, Mich. -- have conducted CPFR pilots with Procter & Gamble and Nabisco, Northfield, Ill.
Not all companies will need, or use, full CPFR capability, said Fobes.
"Retailers will use the full, elaborate CPFR process with their largest, or key, vendors," he said. "A 'CPFR medium' would offer some selective collaboration -- providing forecasts and enabling companies to update their forecasts online.
"'CPFR Light' is basically a sharing of the catalog, with the pure forecast being sent back and forth, but not the full forecasting process," Fobes added.
Laughlin said GNX is constructed that way. "Companies not wanting to do CPFR can pass actual data back and forth on order forecasts and point of sale and avoid the EDI function."
Cincinnati-based Kroger has been using GNX for its online perishables exchange, doing $2 million in transactions, Laughlin said.