Collaborative Planning, Forecasting and Replenishment (CPFR)

Steve Whited & Dennis Van Deusen

Objectives

Define and understand CPFR

Understand CPFR Goals, Costs and Benefits

Describe CPFR at MeadWestvaco Consumer & Office Products (MCOP)

CPFR Defined

An Established process where by Vendor and Retailer communicate forecasts in order to better align common strategic goals. Synchronization of supply and demand will improve each party’s overall performance.

Planning

Forecasting

Replenishment

CPFR Cost/Benefit

Costs

Programming;Software Enhancements; EDI

Dedicated Analysts - increased payroll

Retailer may charge you to participate

Potential fees if not successful

Benefits

More accurate forecasts

Improve fill rate and in stocks = better sales

Reduce Vendor and Retailer inventory levels

Reduced “fire drills” & premium freight; Competitive Edge

About MCOP - Sidney

87 years in the dated goods business

Keith Clark, AT-A-GLANCE, Mead, MeadWestvaco,MWV

Products

Brands

Customers

Commercial Inventory Management Program - late '80’s

VMR/VMI: ARIES model developed (Cornell University) in use 1990.

Commercial Market Inventory Management

Focus- dated goods sold to wholesalers and contract stationers

“Simplified, low tech” CPFR

MCOP Analysts work directly with major accounts

Annual meetings, weekly teleconferences

Focus on annual numbers, major ordering events, units

Sales Rep. administered program for smaller accounts

Stock Order Guides

Inventory Monitors

Overstock returns and transfers

CPFR

MeadWestvaco’s version of CPFR

Vendor creates the forecast. Identifying exceptions is a shared responsibility.

Forecasts are for a full season and are not broken down by week/month.

Forecasts are calculated and communicated in what we anticipate the Retailer will sell, not what we will ship them.

Weekly conference calls are used to review sales trends, adjust forecasts and deal with any “issues.”

Replenishment is done in various methods.• Direct to store• Ship to warehouse• Cross-Docks

The Retailers use many means to evaluate success of the program

Comp sales.

Gross Margin Dollars generated.

In Stock percentage - an extreme challenge in our category.

Lost Sales Dollars.

On time and Complete.

Measurements

A Representative Time TableDecember – Marketing Generates a proposed Mix for Next year’s implementation

based upon current POS.

January – Proposed Mix is presented to retailers. It includes display transition and forecasted unit and dollar sales. A line review with the Retailer is completed for current selling season.

April – Retailer communicates mix. Vendor adjusts forecasts based on sku drop/adds. Vendor and Retailer to review replenishment timeline and adjust forecasts based upon finalized mix.

Time Table Continued

May/June – Initial shipments to Retailer for new products. Retailer transitions displays in store.

September – Vendor and Retailer review early POS and adjust forecasts based upon trends.

October through December – Vendor ramps up shipments. Vendor and Retailer communicate shipping schedules and timelines. They also review in stock percentages and any out of stocks.

December/January – Retailer incurs majority of sales. Planning cycle begins again with marketing review of current POS to determine mix for next year.

Other Initiatives have impact on CPFR

Periodically Retailers have new programs or initiatives that have an impact on CPFR

Change in method of shipment

Freight Collect programs

Sku Reduction

Merchandising Changes

Conclusion

Define and understand CPFR

Understand CPFR Goals, Costs and Benefits

Describe CPFR at MeadWestvaco Consumer & Office Products (MCOP)