SCHNUCKS, NABISCO PLAN FORECASTING PILOT

KIM ANN ZIMMERMANN

ST. LOUIS -- Schnuck Markets here and Nabisco will begin a pilot early next year in which the retailer and the vendor work closely to develop a detailed distribution-level sales forecast and replenishment plan for two product categories. The test is slated to begin in January 1999 and last for about six months.

Unlike similar collaborative planning, forecasting and replenishment pilots, which have focused on sharing forecast data for individual stores or groups of stores, the Schnucks pilot will develop a sales forecast for a distribution center that serves many stores, according to sources. The pilot will encompass Planters nuts products and Milk-Bone brand dog biscuits.

"Forecasts, by their very nature, are wrong, but collaboration between the retailer and the vendor is what it is going to take to get the differences between the forecast and what actually sells to a tolerable level," said Joe Andraski, vice president, customer development, sales and integrated logistics for Nabisco, Parsippany, N.J.

Andraski spoke at a user conference sponsored by i2 Technologies, Irving, Texas, held last month.

CPFR is gaining ground as a method for improving the flow of information across the supply chain. The initiative is designed to provide a single forecast across the supply chain that is jointly developed by manufacturers and retailers. CPFR's goals including growing sales, reducing inventory and out-of-stocks and improving customer service.

In addition to Schnucks, Wegmans Food Markets, Rochester, N.Y., and Wal-Mart Stores, Bentonville, Ark., are participating in CPFR pilots.

Andraski said the pilot at Wegmans, which has been running for about three months, is already yielding positive results. "There was one category that was very flat, and that category is already seeing sales up over 30%, and overall sales are up 50% in the pilot categories. Forecast accuracy is now in the 90% range," he said.

The product categories chosen for the Schnucks pilot -- peanuts and dog biscuits -- have traditionally been notoriously difficult to forecast, so even small improvements would reap benefits.

"These products have irregular sales cycles, are highly promoted and are seasonal," said Brad Scheller, partner in the supply chain practice for CSC Consulting, Wilton, Conn.

"The real value of CPFR is providing exception-based filters, so that everyone involved in the process is only dealing with items outside of the forecast zone, and those items within the forecast zone go in as firm orders without intervention," he said. "Then you can really evaluate those items that fall outside the zone, and focus on what is the issue -- promotions, mismatched calendars, or whatever," he said.