NRF EXPO

PETER PERROTTA

NEW YORK -- Officials from GlobalNetXchange, San Francisco, announced at last week's National Retail Federation Expo here that it is rolling out its Collaborative Planning, Forecasting and Replenishment solution to all members.

Joe Laughlin, chief executive officer of GNX, told SN that, to date, the CPFR solution has only been used in pilots performed by five of GNX's original eight equity partners.

However, Laughlin said GNX is hoping to have 30 to 40 retailers using CPFR by the end of this year.

"We worked out the kinks with the CPFR pilots performed with the equity partners," Laughlin said. "Now, we want to make it available to any customer in the exchange."

GNX, one of the three major electronic exchanges serving the food industry, piloted its CPFR solution with Kroger, Cincinnati; Sainsbury's, London; Sears, Chicago; Metro AG, Dusseldorf, Germany; and Carrefour, Paris, Laughlin said.

CPFR calls for retailers and grocery/consumer product goods manufacturers to work together and share their data on sales results and forecasted sales.

Laughlin explained that, by using CPFR, retailers hope to take ordering inefficiencies out of the supply chain and reduce costs and out-of-stock positions, especially on high-visibility promotional items.

Under GNX's program, both the retailer and supplier pay for using the CPFR solution. The service is priced on a sliding scale based on the amount of consumption of the forecasted products and the type of products.

Laughlin said individual results on Kroger's CPFR pilot were not available yet; however, he did provide some aggregated results from the CPFR pilots.

According to GNX officials, in each pilot program, users experienced considerable improvements in forecast accuracy due to increased flow of information and communication into their demand-planning process.

In aggregated results from all the pilots, supplied by GNX, there was a range of anywhere from a 2% to 12% increase in on-shelf availability, coupled with a 5% to 20% reduction in inventory.

GNX's CPFR pilot with Sainsbury's consisted of a 16-week program in collaboration with Kimberly-Clark, Dallas, that included 20 of the manufacturer's products.

Metro's pilot was conducted at its Cash & Carry stores in Europe, which feature fresh foods and nonfood products for commercial buyers.

Test results, for Metro, showed that warehouse inventory levels were reduced by as much as two weeks, with on-shelf availability maintained at high levels.

Metro officials now plan on rolling out the CPFR solution to at least 10 of its major suppliers this year, Laughlin said.

He said thus far the pilots have shown that the forecasting ability works best on big line items provided by large suppliers.

"Wal-Mart, Sears and Sainsbury's have proved this strategy for years," Laughlin said. "Now, we need to push this data so that small- and medium-sized manufacturers and suppliers can use it."

Laughlin explained that while some of the small- and medium-sized members of the exchange might not use the full CPFR solution available to larger retailers, a "supply link" version might better suit their needs.

Laughlin said supply link is a "light" version of the full CPFR solution in which the retailer and suppliers trade sales data but don't collaborate on forecasting.

"We are hoping to drive the standard for how retailers and manufacturers collaborate over the Internet," Laughlin said.

While it's not there yet, he predicted that this could be the year that CPFR takes off as a solution that more and more retailers begin to use.

"CPFR is going to be big. Wal-Mart has shown this with the way they use their Retail-Link system," Laughlin said.

Moreover, while auctions will continue to provide the main source of revenue for exchanges like GNX, Laughlin said the growth potential of CPFR is unlimited.

While the other two exchanges -- Transora, Chicago, and WorldWide Retail Exchange -- also have CPFR solutions, Laughlin said he believes GNX is further along with its program.