TARGET CORP. EXECUTIVE URGES CPFR ADOPTION

MICHAEL GARRY

MINNEAPOLIS -- At two major industry meetings held recently, Jerry Storch, vice chairman of Target Corp. based here, made it clear that the company intends to pursue collaborative planning, forecasting and replenishment (CPFR), and expects its suppliers to do so as well.

Using essentially the same words at the CIES World Food Business Summit in Atlanta and the Grocery Manufacturers of America's annual executive conference at The Greenbrier in White Sulphur Springs, W.Va., Storch urged suppliers to "embrace joint business planning and CPFR."

Elaborating at The Greenbrier, Storch said, "This [CPFR] is a major area of focus for us as we go forward in our supply chain. We certainly want to get all of our vendor business partners using this tool. We believe this is the most important change in our business in the last decade, working collaboratively in this fashion."

Storch also urged the industry to agree on standards for CPFR, as well as RFID (radio frequency identification) "so we can roll out these technologies."

Also at The Greenbrier, Storch announced that Target has redesigned its online supplier portal, Partners Online, to include "a tremendous increase in functionality." In fact, he said, "We believe it's quite similar to Wal-Mart's RetailLink [online portal] as far as functionality."

According to several industry sources close to Target, the mass merchant has recently issued a letter to between 250 and 350 of its suppliers, encouraging them to adopt CPFR. To help Target's suppliers get up to speed on CPFR, Syncra Systems, Waltham, Mass., a CPFR software provider, held a free seminar here on June 18, the same week as the CIES Summit and a week after the GMA's Greenbrier conference. About 65 people representing 22 suppliers attended the seminar, said Wes Arens, Syncra's senior vice president, worldwide sales and operations.

The Syncra seminar featured presentations from Jack Haedicke, president, Arena Consulting Group, here; Ron Ireland, vice president, Value Chain Collaboration Associates, Denver; and Matt Johnson, Syncra's chief technology officer. According to Syncra, participants said the seminar provided "good, foundational info on what to expect from a CPFR engagement" and was "very informative on the actual monetary advantages/benefits of doing CPFR." Participants included General Mills, Georgia-Pacific, Dial, 3M, Avery Dennison, Ocean Spray Cranberries and Kraft, among others. One retailer, Best Buy, attended.

Ireland, formerly with CPFR pioneer Wal-mart, spoke on the "top 10 excuses for not doing CPFR," which included "It's just a fad," "My company's culture won't change," and "I have too many other initiatives." "Companies should do a CPFR pilot, even if it's manual," Ireland told SN. Haedicke, formerly with Kraft and Nash Finch, gave a primer on CPFR basics. "Companies think CPFR is just an inventory deal, but it also can give you a sales increase," he said.

Syncra plans to do similar seminars in other cities around the country. Minneapolis was chosen for the first seminar because it is the home of Target, "which is a leader in CPFR along with Wal-Mart," said Arens. According to Arens, Target was aware of the seminar but did not attend.

More than 10 Syncra clients are currently engaged in CPFR with Target, four with all their stockkeeping units representing many hundreds of SKUs apiece, said Arens, who declined to name the manufacturers. He said that manufacturers doing CPFR with Target receive POS data and a forecast from the retailer through Target's Partners Online or via electronic data interchange (EDI) 830 documents. They then use a CPFR tool to do exception reporting, comparing Target's forecast with the manufacturer's own forecast to "determine what areas are out of sync and resolve the differences."

Target provides the data, but manufacturers "do most of the heavy lifting" in the CPFR process, either using their own CPFR software or a B2B exchange, said Arens. Target has begun doing its own CPFR training for manufacturers, through conference calls and in-person meetings, he added.

Target declined to comment on the specifics of its CPFR program beyond Storch's public comments.

While some traditional supermarket operators like A&P and Albertson's have begun to pursue CPFR, it is being spearheaded by mass merchants on the retail side, observers said. In SN's eighth annual State of the Industry Report on Supermarket Technology, released last week, just 3% of respondents said that CPFR will command the highest priorities in 2002.