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Introduction to Collaborative Planning Forecasting and
Replenishment (CPFR)
November 3, 2000
Bob CowdrickManager of Business Consulting
Logility [email protected]
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Agenda• Introductions• Logility Overview• What is CPFR• Software Demonstration
– Demand Planning– XPS (eXtensible Planning Solution)
• Case Study• Summary• Adjourn
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Logility Mission Statement
To enable the optimization of our Customer’s Value Chain by
providing solutions that collaboratively integrate their business processes with their
Trading Partners
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Leader: Business-to-Business Collaborative
e-Commerce Solutions via the Internet with over 400 customers
Innovator: Winner Information Week Outstanding e-Commerce Application using Internet
Visionary: First Internet-based B2B Collaborative solution deployed in 1996
Public: Traded on NASDAQ under LGTY
Logility Overview
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“Logility’s strengths include breadth of product suite, ease of use of products (intuitive GUI), demand planning capabilities, rapid implementation focus, internet product -- not just vision.”
Gartner Group
“Logility is pioneering a direction the industry is sure to follow by providing collaborative planning solutions that balance production and supply constraints with demand opportunities.”
AMR Research
Analysts’ Opinions of Logility
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Blue Chip Customers
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HistoricDemand
Forecast
B2B Collaborative Commerce Solutions
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HistoricDemand
Forecast
Collaboration:• Lite Users• Sales Reps• World-Wide• Intranet-Based
B2B Collaborative Commerce Solutions
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HistoricDemand
Forecast
Promotional DataAdvertisingCalculate Lift
B2B Collaborative Commerce Solutions
Collaboration:• Lite Users• Sales Reps• World-Wide• Intranet-Based
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HistoricDemand
Forecast
Time-PhasedInventory Plan
Inventory Rules:• Service Levels• Safety Stock• Inventory Turns• Order Quantity
Promotional DataAdvertisingCalculate Lift
B2B Collaborative Commerce Solutions
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HistoricDemand
Forecast
Time-PhasedInventory Plan
On-Hand Inventory, ExpectedReceipts, Customer Orders
Supply ChainNetwork
Transfer Orders, Manufacturing Orders, or Purchase Orders
Promotional DataAdvertisingCalculate Lift
B2B Collaborative Commerce Solutions
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Forecast
Time-PhasedInventory Plan
Planned Orders
Inventory Rules:• Service Levels• Inventory Turns
HistoricDemandFrom Legacy
Orders
Trading Partners
Promotional DataAdvertisingCalculate Lift
B2B Collaborative Commerce Solutions
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HistoricDemand
Forecast
Time-PhasedInventory Plan
Constrain Supply Orders
Transfer Orders, Manufacturing Orders, or Purchase Orders
Promotional DataAdvertisingCalculate Lift
Inventory Rules:• Service Levels• Inventory Turns
On-Hand Inventory, ExpectedReceipts, Customer Orders
B2B Collaborative Commerce Solutions
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HistoricDemand
Forecast
Time-PhasedInventory Plan
Transfer Orders, Manufacturing Orders, or Purchase Orders
Constrain Supply Orders
Promotional DataAdvertisingCalculate Lift
Inventory Rules:• Service Levels• Inventory Turns
On-Hand Inventory, ExpectedReceipts, Customer Orders
B2B Collaborative Commerce Solutions
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HistoricDemand
Forecast
Time-PhasedInventory Plan
Transfer Orders, Manufacturing Orders, or Purchase Orders
Constrain Supply Orders
On-Hand Inventory, ExpectedReceipts, Customer Orders
Inventory Rules:• Service Levels• Inventory Turns
B2B Collaborative Commerce Solutions
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Demand Planning
• Flexible Business Model
• Best Fit Modeling
• Graphical Review & Overrides
• Advanced Simulations
To deliver the most accurate forecasts with
the least effort.
The GoalThe Goal
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Management OverridesManagement Overrides
Pyramid Power & Flexibility
Logistics Face Logistics Face
DIV
Family
SKU
DC
CustomerSaks
Atlanta
KK101
Watch
Retail
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Type
Flexible Aggregation
Sales FaceSales Face
32 User Defined Attributes
SKU
SalesmanSalesman
Area
Region
SKU
DC
CustomerCustomer
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SEASONAL NONSEASONAL
PATTERNEDIRREGULAR
UNPATTERNEDIRREGULAR
MOVINGAVERAGE
DERIVED
Automatic Model Selection
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Self Correcting Process
Forecast ComponentsForecast Components
BEST POSSIBLEFORECAST
BEST POSSIBLEBEST POSSIBLEFORECASTFORECAST
Tracking SignalsTracking Signals
Demand FiltersDemand Filters
SEASONALITY
Dynamic SmoothingDynamic Smoothing
Reasonability
Checks
Reasonability
Checks
LEVEL
TREND
- - - - - - - - - - - - - - -
- - -
- - - - - - - - - - - - - - -
- - -FORECAST
ACTUAL DEMAND OUTLIER
FORECAST
ACTUAL DEMAND
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E-Business ContinuumCollaborativeCommunity
CooperativeCoercion
TradeExchange
EDI overInternet
PreInternet
1
a
bc
a
bc3
1
2 a3
11
a
b
2 c
Buyer Seller
RelationshipModel
One to OneCompany v Company
Many to Many Many to Many One to ManyCompany v Company
HybridColloboration
Buyer Seller Buyer Seller Buyer Seller Buyer Seller
2
a
bc3
12
Ind. Material, Public
Competition
One to One,MChain v ChainDirect Material
PrivateCollaboration
CPFR.ORG
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E-Business ContinuumCollaborativeCommunity
CooperativeCoercion
TradeExchange
EDI overInternet
PreInternet
1
a
bc
a
bc3
1
2 a3
11
a
b
2 c
Buyer Seller
Transaction Cost, Unit Cost
Service, Revenue, Relationship ValuePrimaryBenefit
RelationshipModel
One to OneCompany v Company
Many to Many Many to Many One to ManyCompany v Company
HybridColloboration
One to One,MChain v ChainDirect Material
PrivateCollaboration
CPFR.ORG
Buyer Seller Buyer Seller Buyer Seller Buyer Seller
2
a
bc3
12
Ind. Material, Public
Competition
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CPFR: What Is It?
• A major initiative by large-scale backers
• It’s not a technical protocol
• A business process model in 9 steps
• Applies to all trading partner relationships
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A Definition…
A formal business process for value chain partners to coordinate plans in order to improve efficiencies and increase sales and service.
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VICS-CPFR Participants
• Corning Consumer Products• Eastman Kodak• Fieldcrest Cannon• Hewlett Packard• Kimberly-Clark• Levi Strauss• Philips Consumer Communications• Mead School & Office Products• Nabisco• Pillsbury• Procter & Gamble• Sara Lee• Warner-Lambert
ManufacturersManufacturers RetailersRetailers• Circuit City• Federated Department
Stores• JCPenney• Kmart• Staples• Wal-Mart
• Benchmarking Partners• DAMA Project• Ernst & Young• Intelink• Uniform Code Council
OthersOthers
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Collaborative Trading Communities vs. Exchanges• One to One • Many to Many
• Price is not • Price is keyprimary driver decision factor
• Products are branded • Products are not or differentiated differentiated
• Fulfillment is • Fulfillment is competitive weapon homogenous
• Discontinuous • Continuous innovation,innovation, integrating automating old business new business processes processes
• Exception based • Self-service based
• B2B Exclusive • B2C and B2B
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The CPFR Process
1. Front-End Agreement
2. Joint Business Plan
3. Create Sales Forecast4. Identify exceptions5. Resolve exceptions
6. Create Order Forecast7. Identify exceptions8. Resolve exceptions
9. Generate Order
Once
Qtr
.
Wk,
Mo
Wk,
Mo
Collaborative Planning
Collaborative Forecasting
Collaborative Replenishment
Seller
Buyer
Sales Forecast
Order Forecast
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Voyager XPSTM – VICS-Compliant CPFR
• Collaborative Forecasting and Replenishment
• Configurable Workflow Capabilities– Process Definition for managing
Trading Partner Relationships• Universal Exception Builder
– User configurable exception engine• Scalable Deployment
– Hub and Spoke and Peer to Peer
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Heineken USA
• Per Gartner Group and AMR: acknowledged as the first collaborative forecasting and replenishment system over the Internet (live since Dec. ‘96)
• $750M/year beer importer• 425 distributors (95% of volume) now live with
HOPS over the Internet• Order to Cash Cycle Reduced by 4 weeks (from 9 to 5)
Case Study
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Heineken, USA• Challenge: New business process, connecting
450 distributors, Heineken USA, and Heineken breweries
• May 1996: Contract signed
• July 1996: Implemented Logility Value Chain Solutions at corporate
• November 1996: Pilot distributors live with Demand and Supply Chain Voyager
• December 1998: 100% participation
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Heineken “before”
• Extended order cycle time
• Traditional supply-side focus
• Disconnected from field knowledge
FactoryFactoryWarehouseWarehouseDistributionDistributionTradeTradeYou & MeYou & Me
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• Focus on entire Value Chain
• 4 week reduction in lead time
• Fresher product on shelf
• Heineken Sales focused on trade cultivation
Heineken “after”
FactoryFactoryWarehouseWarehouseDistributionDistributionTradeTradeYou & MeYou & Me
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Why CPFR?
· Reduce variance between your Supply and your customers Demand through jointly derived plans.
· Increase Revenue.
· Competitive Advantage: Win with your partner mentality - “My chain is better than your chain”.
· More accurate collaborative plans equates to more accurate/automatic execution transactions.
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