NEW ORLEANS -- Nabisco and Wegmans Food Markets have announced a 13-week test of a young distribution concept designed to bolster sales and wring inefficiencies out of the supply chain.
The program is called "collaborative planning, forecasting and replenishment," and with it retailers and manufacturers agree on sales forecasts for a given period, using sales history, promotion plans and other data -- and then preset order amounts when the forecast is completed.
Although the concept is still in its infancy, its supporters say CPFR has the potential to even out the traditional peaks and valleys in the supply chain, as well as increase sales and reduce out-of-stocks at the retail level.
"I believe we'll see double-digit sales increases for these products during the third and fourth quarters of this year," said Joe Andraski, vice president of customer development, sales and integrated logistics at Nabisco. "I believe CPFR is what's been missing from the Efficient Consumer Response initiative."
Officials from both companies announced the pilot last week at the Voluntary Interindustry Commerce Standards Association conference, which was held here in conjunction with the Retail Systems 98 conference.
The Wegmans' pilot, which involves 22 stockkeeping units in Nabisco's Planters nut brands, began June 1, according to Andraski. The first delivery using the preset orders is scheduled to take place July 10.
While Nabisco, Parsippany, N.J., is in discussions with other retailers, including Schnuck Markets, St. Louis, and Wal-Mart Stores, Bentonville, Ark., to test CPFR, the Wegmans test is the furthest along, according to Andraski.
"We review the plans five weeks ahead, and then when the plan becomes a forecast, the orders are frozen," said Andraski.
Nabisco and Wegmans will use several measures to determine the pilot's success, including out-of-stock levels on the store shelf and at both Wegmans' and Nabisco's distribution centers.
Sales growth, case fill rates, days of supply and forecast accuracy will also be tracked, as will the number and percentage of exceptions to the "frozen" order amounts.
"CPFR standards provide guidelines for building the information-technology environment necessary to integrate demand- and supply-side processes, increase in-stock sales and reduce inventory," said Jack DePeters, director of grocery, dairy, frozen and bulk foods for the Rochester, N.Y.-based Wegmans chain. "This make-to-order approach will yield cost efficiencies that can be passed on to the consumer."
Interest in CPFR has been growing recently, especially with the activity of the VICS CPFR Committee, which Andraski co-chairs. He also serves on the ECR Operating Committee.
'The subcommittee identified generic CPFR process models that would work for small and large companies and across different industries," said Robert Bruce, industry director at the consulting firm Benchmarking Partners, Cambridge, Mass.
Bruce, who chaired the subcommittee that drafted the standards, added, "It also identified the business processes involved, as well as the performance metrics, and offered standards for data communication."
The subcommittee sent its report to the VICS in December for a comment period, and the organization considered the draft standards for approval at this meeting.
The first major CPFR pilot took place from late 1995 to early 1996 at Wal-Mart and involved Warner-Lambert's Listerine products. The program succeeded in increasing the products' in-stock position and sales.
Other current CPFR committee pilots at various stages include several at Wal-Mart, with manufacturers including Procter & Gamble, Nabisco, Sara Lee and Lucent, and a Kimberly Clark pilot at Kmart, Troy, Mich.
The process offers promise, according to Andraski, because it addresses one of the fundamental issues of supply-chain management.
"Manufacturers," he said, "fill distribution centers based on [sales] history, using nothing related to product promotion or seasonal changes. It's a system that is out of sync with the customers."
