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Wal-Mart Stores, Inc.

Confidential Page 1
Retail Link
CPFR
ALWAYS LOW PRICES. ALWAYS WAL-MART.
Collaborative Planning, Forecasting and
Replenishment
Wal-Mart Stores, Inc. Confidential Page 2
WHAT IS CPFR??
COLLABORATIVE
PLANNING, FORECASTING
AND REPLENISHMENT

A SINGLE SHARED VISION OF CUSTOMER FORECASTED
DEMAND AT STORE LEVEL
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Purpose
Provide Forecast Managers,
Buyers and Suppliers the
information to improve in-
stock at store level and
reduce excess inventory
throughout the supply chain.
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Goals
Improve Instock
Increase Sales
Reduce
Inventory
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Supplier Benefits
More Consistent
Order Flow
Better Production
Planning
Less Inventory
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Collaboration
Should be
happening
throughout all
channels of the
supply chain.
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Supply Chain includes:
Raw Material Supplier
Production Facilities
Packaging
Transportation
Buyer/Supplier
Replenishment Manager
Distribution Centers
Stores

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Planning and
Forecasting
Promotions
Availability Issues
Transportation Issues
Seasonality
Assortment Changes

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Replenishment
Fill Rates
Lead Times
Inventory Ownership at Store
Inventory Ownership at DC
Promotions
Holidays



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What information
can be found on
the Wal-Mart
CPFR site...



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WEEKLY SALES FORECAST
HISTORICAL SALES
ONHAND
ONORDER
SEASONAL PROFILE
STORES OUT OF STOCK
EVENT CALENDAR
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Lets take a
look at the
CPFR site...



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TO ACCESS CPFR:

--RETAIL LINK

--MERCHANDISING

--INVENTORY MANAGEMENT

--CPFR
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The first option in the menu bar under
Collaboration is the Revision Notification
Screen.

This screen indicates if any collaborations have
been done on a particular item.

The buyer, supplier and replenishment manager
all have the ability to collaborate and view
activity on the notification screen.

A checkoff feature is also included on this
screen. Once an item is worked, the user may
click on the box to the left and the item will not
be shown until more activity occurs.






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Revision Notification
Revision notification for:
- Forecast Revisions
- Collaborative Messages

Click on item number
link to go to
collaboration screen
Click on message
link to go
to message center.
Click on box to not show
revision.
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To pull up item(s) that are not listed on the
revision notification screen, click on Item
Selection located in the left margin.

Exceptions can be identified in numerous ways.
Item number
upc
stock number
6 digit supplier number
9 digit supplier number
fineline
buyer id

User may also specify all items or specific item type.








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Item Selection
Selections may be
on:
- Item
- UPC
- Stock Number
- Order Department
- Vendor Number
- Fineline
- Buyer id
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ITEM GROUP CREATION
An item group may be used in the
item select function to pull back
exceptions.

It is a good way to monitor
exceptions on particular groups ie.
Key items, OPP, etc.
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ITEM GROUP CREATION
The specific items to be impacted
can be entered in manually or the
user may do a copy/paste from a
spreadsheet.

Lets see how to create the item
group...
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ITEM GROUP CREATION
Step 1 -- enter item numbers
Step 2 -- enter name of item group
Step 3 -- Click on Save Group
An existing item group may be located by using either
the vendor number or creator id. Click on search.
Existing item groups will be listed here.
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ITEM GROUP CREATION
After an item group has been created,
the system assigns an id to that group.
A message will appear at the top of the
screen providing the group number.

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CPFR is designed to be an exception based
tool.

Exceptions are based on the following criteria:
Operational Criteria
Lost Sales
Presentation Instock %
Forecasted Weeks Onhand
Forecast Criteria
Forecast Confidence
Forecast Difference
Forecast Change

We will look at each one of these measurements...








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Operational Criteria

Lost Sales:
sales forecast / 7 * days out of stock * unit price

Presentation Instock:
onhand qty compared to the average daily sales [last 4 wks sales/28] and
max shelf quantity.

Forecasted Weeks Onhand:
The number of weeks the current onhand will last, based on forecasted
sales

The supplier, replenishment manager, and buyer need to
determine criteria values based on the department and/or
category goals.









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Forecast Criteria

Forecast Confidence:
Measurement of forecast accuracy when compared to the actual
pos sales for that time period. 4 samplings of data will be used to
determine the accuracy. Accuracy is measured over different
time ranges from 1 week to 6 months.
The percent of error = (forecast - sales) / forecast .

Forecast Difference:
Measures difference between the supplier and the Wal-Mart
forecast. Will only be used if supplier is transmitting a sales
forecast via EDI 830. EDI 830 is not required.

Forecast Change:
Measures how much the Wal-Mart forecast fluctuates from week
to week looking out at the next 13 weeks.










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Once the criteria values have been decided, the
replenishment manager will enter the criteria
within CPFR. Currently, there is corporate
criteria being used to pull back exceptions.

Based on the criteria entered and the information
put into item selection, the exceptions will be
pulled back. The user will see the Exception
Management screen. A count of exceptions will
be listed next to each criteria.









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Exception Management
Total count of items
meeting item selection
criteria.
Number of items that
have had collaborative
revisions.
Number of
exceptions based
on preset criteria
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To view which items are causing the exception,
the user will click on the link next to the criteria
in question. The list of exception items will
appear.








User may sort values by
clicking on title bar.
User may sort items by
clicking on title bar.
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Once an item has been selected, the user will
advance to the collaboration screen. This screen
contains a lot of valuable information.

Questions to ask while viewing this screen:
1. How is the forecast trending compared to sales?
2. How have the receipts been trending? Fill rate?
3. What is the store inventory? DC inventory?
4. How much is on order? Replenishable? Non
replenishable?
The buyer, supplier or replenishment manager can input
suggested forecast changes. Once entered, these will
appear on the revision notification screen.








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Forecast
Collaboration
Order Information
WM Forecast
POS, Receipts, Inventory

Suggested Changes
Current week
Last 4 weeks
Future weekly forecast
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Across the top of the screen, there are other
options to select.

1. Item Information
2. Forecast Metrics
3. Collaboration
4. Help

Lets look at each of these...








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Item Information
Basic item information will be shown and
links will be provided for each of the
Operational Metrics:
- Lost Sales $
- Presentation Instock %
- Instock %

Forecasted Wks Onhand and Turns will
also be provided.

User will be able to click on any of the links to drill down to warehouse
and store level information.
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Warehouse Information
User may see how many stores are out by warehouse.
Is there a specific warehouse having issues?
Is it the farthest shipped warehouse?
Is the issue due to weather?
Is the issue due to a warehouse realignment?
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Store Information
User may sort Store or Deseasonalized Demand by clicking on the title bar.

Deasonalized Demand = Average Rate of Sale; also referred to as dd.

A dd of .1 is the default dd used if no forecast is received from the buying
office. Anytime these are found, contact your replenishment manager. A new
forecast needs to be set for these stores. It takes an average of 6 weeks of
being consistently instock to establish a true rate of sale.

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Forecast Metrics is the next
option listed at the top of the
screen. We are measuring the
following:

1. Forecast Confidence
2. Forecast Difference
3. Forecast Change










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Forecast Metrics
Forecast Difference
Forecast Confidence
Forecast Change
Lets look at each of these measurements...
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Forecast Confidence:
Measurement of forecast accuracy when
compared to the actual pos sales for that time
period. 4 samplings of data will be used to
determine the accuracy. Accuracy is measured
over different time ranges from 1 week to 6
months.

The percent of error =
(forecast - sales) / forecast.

Example: 1 week horizon
When we created a forecast looking 1 week out,
how accurate was that forecast?
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Forecast Confidence
4 data samplings
shown
% of Error =
(forecast sales) /
forecast
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Forecast Difference:
Measures difference between the supplier
and the Wal-Mart forecast. Will only be
used if supplier is transmitting a sales
forecast via EDI 830. EDI 830 is not
required.











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Forecast Change:
Measures how much the current Wal-Mart forecast for the
next 13 weeks differs from the previous weeks forecast.
The forecast should not fluctuate too much unless the
replenishment manager has adjusted it through a
replenishment setting or some other means. Store count
change and trait changes can also have an impact.










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Collaboration is the third option across
the top of the screen. In addition to the
collaboration screen, the following
screens may be viewed:

Message Center
Forecast Analysis Graph
Seasonal Profile
Forecast Collaboration









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Message Center
Buyers, Replenishment Managers and Suppliers may
communicate to each other using this message system. Once
a message is entered here, it creates a message link on the
revision notification screen.
Enter message information here
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Forecast Analysis Graph
Forecast and sales information are put
in graph format. Vendor forecast will
only show if edi830 is being transmitted.
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Seasonal Profile Graph
Seasonal Profile Graph shows:
- Last 52 weeks POS
- Number of Zone profiles in use: Seasonal items affected by weather should have zone
profiles.
-The profile key will indicate if a corporate fineline profile is being used or an item
level profile. Corp = c0001dxxf000xxxx. Item = c0001x00ixxxxxxx
-Seasonal Profile: Does it reflect your peak seasons?

Were there instock issues?
Promotional activity?
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CPFR is an excellent tool to use in
planning and analyzing the business.

In order to better maximize this tool,
expectations have been established for
the Replenishment Manager, Supplier and
Merchandising.

Lets look at these expectations...








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REPLENISHMENT MANAGER
EXPECTATIONS
Replenishment manager will determine
the best method of reviewing items. Ie.
Top 5 items, instock

Review a minimum of 25 items total per
week.



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REPLENISHMENT MANAGER
EXPECTATIONS
Open CPFR each day to review
collaborations.

Once system action has been taken, a
message will be posted.

Respond to supplier/merchandising in a
timely manner.



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SUPPLIER EXPECTATIONS
Prior to collaborating on CPFR, contact your
replenishment manager for specific direction.

The replenishment manager will give you
guidelines on:
quantity of items to be reviewed
frequency of review
expected response time.


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SUPPLIER EXPECTATIONS
The supplier expectations can be broken
into 4 categories:
Forecast
New Items
Event Planning
Seasonal Goods



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SUPPLIER EXPECTATIONS
Forecast
1. Issue Identification
-SWAS--Forecast Accuracy
-Warehouse Level Instock
-Store Level instock
-CPFR
2. Prioritize Issues in the following manner:
-Store Instock
-Warehouse Outs
-Forecast Variance
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SUPPLIER EXPECTATIONS
Forecast
3. Issue Research
-Verify fill rate for the last 30 days.
-Lead time accuracy-PO detail report from RL
-Review profile, overlay sales
-Is there a current promotion affecting sales?
-Was there a significant store count change?
-Is there a significant variance between valid vs traited store count?
-Sales vs Forecast for the last 4 wks--identify trend
-Compare the items max shelf quantity to its average rate of sale
per store. Is the item outpacing its holding capacity? Multiple
facings should be combined to represent one max shelf
quantity.
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SUPPLIER EXPECTATIONS
Forecast
4. Communication of Issue
-CPFR - Message Center
1. Identify issue
2. Summarize issue research including current fill rate and
reason issue occurred.
3. Recommendation of Resolution

Initial communication should be at corporate level. Once the
replenishment manager reviews the issue, store detail analysis may be
requested.

The Wal-Mart weekly forecast can not be changed by a specific quantity. It is
a calculated forecast through a formula using the DD and Profile. Thus, the
replenishment manager will only be able to affect a specific weeks forecast
by changing the profile or manipulating the DD.
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SUPPLIER EXPECTATIONS
Forecast
4. Communication of Issue
Due to system and transportation lead times, it will take 2-4
weeks before a forecast change will affect sales / instock.

Allow 2 weeks for forecast change visibility. During that time,
tracking purchases is the best measure to evaluate the effect.

Focus on the forecast for the next 30, 60, and 90 days out unless
business needs dictate otherwise. Ie. Imports.

5. Replenishment Response
CPFR - message center
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SUPPLIER EXPECTATIONS

New Items

1. CPFR - Forecast metrics should be reviewed
the 2nd, 4th, and 6th week after the modular
effective date.

2. Forecast variances of 20% or more should be
posted in the CPFR message center.

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SUPPLIER EXPECTATIONS

Event Planning
Post in CPFR - Event Calendar no later than 30 days
prior to effective date.

1. Modular Changes
-Deletions
-Number of Facings
-Store Count
-Modular Placement


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SUPPLIER EXPECTATIONS
Event Planning

2. Promotions / Rollbacks / TAB
- TY vs LY ship quantity
- What is the promotional vehicle?
- TY vs LY ship week
- TY vs LY store receipt week
- TY vs LY store distribution
-TY vs LY Retail - if known
- TY vs LY POS comparison
- Is there cannibalization of like items?


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SUPPLIER EXPECTATIONS

Seasonal Goods

1. Review prior to start of season, early
season and just before season peaks.
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Now lets look at
Merchandising expectations...
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MERCHANDISING EXPECTATIONS
Communicate modular changes that will
impact replenishment ie store count,
asst change, increased facings.

Communicate assembly items that are
being deleted so end of season logic
may be utilized.



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MERCHANDISING EXPECTATIONS
Utilize the Event calendar to identify any
upcoming promotional activity ie. Rollbacks,
tabs, general orders, ssos.

Review new items 2nd, 4th, and 6th week.
Note issue if sales > forecast 20%+ over this
time period.

Review items where change in forecast will
affect overall buy plan/commitment.



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Remember...
CPFR is
A SINGLE SHARED VISION OF
CUSTOMER FORECASTED
DEMAND AT STORE LEVEL

Lets work together to make it
happen!
Wal-Mart Stores, Inc. Confidential Page 61
ALWAYS LOW PRICES. ALWAYS WAL-MART.