WAL-MART, KMART STRESS IMPORTANCE OF WEB-BASED CPFR

JEANETTE HYE

ATLANTA -- In a rare public dialogue, executives from the nation's top mass-merchandising giants, Wal-Mart and Kmart, championed the necessity of Web-based collaborative planning, forecasting and replenishment and highlighted each company's plans to ramp up its CPFR initiatives.

Acknowledging their CPFR shortcomings and driving home the importance of building Web-based CPFR practices into the supply chain, Wal-Mart's Hans Holmer, strategy manager of apparel and grocery supply-chain management, and Kmart's Dan VanHammond, divisional vice president of planning, said each company still has work to do if it is going to build CPFR into a reliable and consistent information-sharing process.

Both Holmer and VanHammond acknowledged the need for retailers to build better partnerships with their vendors through CPFR.

"We are behind on integrating EDI into the process, but we are now building up the relationship back down the supply chain," said Holmer, who addressed the subject during the opening keynote address at the Bobbin Americas show held here Sept. 30 through Oct. 2.

Kmart's VanHammond said his company is also just gearing up to embrace Web-based CPFR. Kmart, which added its first three partners--Johnson & Johnson, Westpoint Stevens and Ralston Purina -- this year, will add 25 more vendors this year. VanHammond said the company hopes to be on-line to most of its vendors by 2000.

Holmer said Wal-Mart is also working to expand CPFR, but must first address some "key shortcomings" in the supply-chain process.

Among them are the retailer's inability to accept certain EDI notices through its Web-based CPFR site for suppliers. In addition, the company needs to use more consistent methods of communicating with vendors, said Holmer. Although the retailer tries to manage each relationship with vendors the same way, variations in vendor's interaction with Wal-Mart can occur depending on the vendor/buyer relationship or even the vendor's technological capabilities.

Web-based CPFR would help standardize that communication and bring more consistency to the information-sharing process.

Holmer said Wal-Mart has a number of initiatives under way to improve the process, including enhancing its Retail Link system, a private Web-based network that facilitates communications between Wal-Mart and its suppliers. In August, the company took a step toward improving Retail Link by expanding the historical data available to suppliers. Suppliers previously had access to five fiscal quarters worth of data. Today, they can access two years of data. The ability to accept additional EDI notices via the Web is expected within the next year, said Holmer. Wal-Mart is also in the process of putting together an Internet-accessible step-by-step guide for suppliers, detailing how to work with Wal-Mart.

VanHammond said that Kmart, too, is beefing up the information it provides to suppliers and expects to have on-line benchmarking scorecards that will allow its vendors to see how their products are performing on a day-to-day basis. In addition, Kmart provides its vendors with Web-based vendor manuals and information on how to work with Kmart. "We put it on the Web so that we could keep it current and up to date," said VanHammond.

Both executives said that sharing information regarding product promotions is also an essential part of making CPFR work.

Kmart's VanHammond said the retailer currently provides promotion information 26 weeks in advance and is currently working to make it 52 weeks in advance.

Going forward, Wal-Mart will also begin to share information regarding product promotions, which Holmer identified as a "key need" among suppliers.

Web-based CPFR, said Holmer, becomes increasingly important to Wal-Mart as it recognizes that planning, not just lead times, is key to successful inventory management.

"We have always considered the most important thing to be lead time," said Holmer. "Now we know that variability is more important. Knowing what to expect and being able to plan are also important," said Holmer.