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CPFR clamor persists, but adoption remains slow
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June 28, 2002 (Computerworld) -- CHICAGO -- The fact that one retail executive felt compelled this week to publicly challenge his industry peers to drive collaborative planning, forecasting and replenishment (CPFR) home in their companies was a telling statement about its slow progress.
The term CPFR -- which refers to a collaborative business process for improving supply chain efficiency -- made its debut six years ago, according to those involved in its introduction. But pilot projects are still far more common than large-scale implementations, and scores of retailers haven't begun to implement CPFR, various industry sources and analysts sources said.
"I'm losing patience with CPFR in terms of getting it going," said Tom Cole, chairman of New York-based Federated Logistics, Operations, Store Planning and Systems. Federated Logistics is a division of Cincinnati-based Federated Department Stores Inc.
Cole's disappointment extended to his own company, which has just one serious CPFR pilot in the works, a project with New York-based Liz Claiborne Inc.
"When we sit here and talk about it amongst all these people, we have to realize it's not a success," Cole told attendees here at the Retail Systems 2002 Conference and Exposition. "It's still an idea."
AMR Research Inc. in Boston estimates that between 45 and 65 retailers and between 100 and 150 manufacturers are piloting or implementing some form of CPFR. Some are doing projects with multiple trading partners, but no company is where it would eventually like to be.
Cincinnati-based Procter & Gamble Co., for instance, was one of the earliest adopters of CPFR practices and is doing collaborative planning with hundreds of retailers, according to Milan Turk, the company's director of customer e-business. But for Procter & Gamble to reach the sort of critical mass that will affect its production cycles for goods such as detergent, it will need to have roughly 12 of those retailers performing full CPFR with the company, he said.
"That's two to three years away," Turk said.
That's not to say that early adopters aren't seeing benefits. A study commissioned by the Washington-based Grocery Manufacturers of America showed that those companies with CPFR pilot programs cited improved relationships with trading partners as the No. 1 benefit.
Improving forecast accuracy, which many had thought would be the primary benefit before the projects started, ranked fifth.
Stephen David, CIO at Procter & Gamble, said his company and the retailers it deals with are seeing good results, but industry adoption has been slow. "I think people are starting to realize that you're not going to do full CPFR with every single retailer/supplier relationship," he said. "The most important part is really working on the collaborative portion of this."
The reasons why companies haven't undertaken CPFR are plentiful, ranging from fears about cost, time and staffing requirements to the lack of good tools.
Brian Kilcourse, CIO at Longs Drug Stores Corp. in Walnut Creek, Calif., said his company hasn't started CPFR because it's putting in new supply chain systems. Once those systems are in place, he said, Longs plans to do CPFR. But those systems could take another three years to install.
Kilcourse noted that with different legacy systems in place, it's very difficult to put together good, solid, reliable data in a way that makes sense to the company you're trying to share it with. "Once we do that, then we have to have the human processes in place to truly collaborate," he said.
One of the biggest impediments to mass adoption -- even among early adopters -- is the issue of trust. Many retailers, competitive by nature, continue to be reluctant to do the kind of data sharing that CPFR requires.
"In our industry space, traditionally it's been very hard to elicit the type of detailed data you need to build a real, heavy-duty collaborative process or planning process. And we're just at the baby steps of executing some of those front-end agreements," said Paul Lanham, senior vice president and chief technology officer at Jones Apparel Group Inc. in Bristol, Pa.
Even so, said Lanham, Jones Apparel, which started its CPFR efforts about two years ago, is "pretty bullish that some of those processes will become reality over the next couple of years."
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