o Manuscripts that are found to be plagiarized from a manuscript by other authors, whether published or unpublished, will incur plagiarism penalty 1 How Walmart Enhances Supply Chain Management With C.
How Walmart Enhances Supply Chain Management With CPFR Initiatives: an extension research to the previous journal entitled “How RFID Technology Boosts Walmart’s Supply Chain Management” by the same Author Alexander Harsono STMIK Pontianak Sponsored by IT Consulting firm PT Metadata IT BizSolutions and CV Omah IT Yogyakarta Indonesia alex189@ymail.com;metadata89@gmail.com Abstract – The role of collaborative planning, forecasting, and replenishment (CPFR) in supply chain management have gained significant interest in researchers and academics in recent years Yet, very few studies conducted on how CPFR software could boost supply chain management (SCM) So this study was to scrutinize how Walmart harnessed CPFR to enhance supply chain management Exploratory research approach was adopted to obtain an in-depth understanding of CPFR and supply chains through related textbooks, journals and literatures Then the research was conducted in the form of case studies on CPFR and SCM, and the benefits Walmart and P&G could gain from CPFR and SCM practices In general, the research is more descriptive and interpretive in nature Findings showed that CPFR played an important role in SCM to better control inventory, reduce stockouts, bullwhip effect, reduction in manual orders resulting in a reduction of excess inventory, and improved service levels The paper is original that provides empirical support to CPFR and SCM implementation, and creates value for retail stores and their suppliers on managing inventory Keywords—CPFR, EDI, RFID, VMI -This research paper is an extension research to the previous journal research on RFID role in SCM entitled “How RFID Technology Boosts Walmart’ SCM” by a single author discussing further on how integrated IT-enabler powerfull tools such as RFID, VMI, EDI, etc enhanced SCM I INTRODUCTION The complexity of today’s supply chain requires manufacturers and distributors to search for new methods to reduce costs, increase efficiencies, reinvent channel models, engineer collaborative relationships, and span functional, cultural, and personal boundaries The most common solution to supply chain uncertainties is to build inventories, or safety stock, as insurance High levels of safety stock increase the costs of holding inventory High inventories at multiple points in the supply chain can result in the bullwhip effect Low inventory levels increase the risk of stockouts or insufficient supply and lost revenues when demand is high or delivery is slow In either event, the total cost—including the cost of holding inventories, the cost of lost sales opportunities, and bad reputation— can be very high While advance planning and scheduling (APS) and SCM applications provide for the optimization of the supply chain, CPFR seeks to act as a key enabler for the realization of synchronized supply chain forecasting and replenishment CPFR is the latest generation in a train of channel management philosophies focused on supply chain synchronization As illustrated in Fig to 6, CPFR is the maturation of efforts such as quick response, vendor managed inventory (VMI), and efficient customer response and can be thought of as the perfect joining of ERP and CRM in an Internet-driven supply chain environment dedicated to the integration and synchronization of the entirety of channel demand while reducing total network inventories and costs CPFR is a set of data-driven business processes designed to improve the ability to predict and coordinate with supply chain partners CPFR is considered superior to the earlier electronic data interchange (EDI)-based SCM practices since it is based on much broader cooperative arrangement where retailers and suppliers jointly develop forecast by sharing point-of-sales (POS), inventory, promotions, strategy and production information With CPFR, suppliers and retailers collaborate in planning and demand forecasting in order to ensure that members of the supply chain will have the right amount of raw materials and finished goods when they need them In VMI situation, Procter & Gambler (P&G) manages the inventory of its customers, eliminating the need for customers to send purchase orders.The advantage to the vendor is having more advanced notice of product demand.The advantage to the retailer or distributor is minimizing inventory costs Having the correct item in stock when the end customer needs it benefits all partners One of P&G’s first collaborations was with Walmart P&G continuously replenished Pampers baby diapers at Walmart stores Continuous replenishment is a supply chain relationship in which P&G continuously monitors the inventory of Walmart or distributor and automatically replenishes its inventory when levels hit the reorder point Walmart knows that continued market dominance will go to those who know how to harness the evolutionary process taking place within their supply chains Therefore, the topic “How Walmart harnesses SCM with CPFR initiatives” becomes an interesting issue to discuss For further an in-depth exploration of collaboration between Walmart store and its one of suppliers P&G, this case study focused on firstly, understanding the concept of CPFR, How it works, secondly, identifying the major elements of Walmart’s CPFR success, and analyze the o Manuscripts that are found to be plagiarized from a manuscript by other authors, whether published or unpublished, will incur plagiarism penalty benefits of the CPFR implementation for both Walmart and P&G II LITERATURE SURVEY The keystone of SCM is the willingness of supply network partners to engage in and constantly enhance collaborative relationships with each other Unified channel collaboration makes it easier to ensure connectivity of all channel nodes, availability of the proper technology tools for information visibility and real-time transfer, acceptance of common performance metrics and benefits, and access to demand patterns and expectations as they stream across the supply chain Collaboration is one of the key foundations of SCM and is recognized as a high-corporate priority, the path to successful collaboration is blocked by many barriers Despite that fact that such numbers indicate that truly cohesive and collaborative supply chain teams are the exception and not the rule, today’s advanced supply chain leaders P&G and Wal-Mart are winning and outdistancing the competition because they understand their success rests on seeing themselves as the drivers of value chain collaboration [1] According to the Voluntary Inter-industry Commerce Standards (VICS) Association [2], CPFR is “a set of business processes that entities in a supply chain can use for collaboration on a number of retailer/manufacturer functions towards overall efficiency in the supply chain.” CPFR is a registered trademark of the VICS Association The Council of Supply Chain Management Professionals (CSCMP) describes CPFR as: a concept that aims to enhance supply chain integration by supporting and assisting joint practices CPFR seeks cooperative management of inventory through joint visibility and replenishment of products throughout the supply chain Information shared between suppliers and retailers aids in planning and satisfying customer demands through a supportive system of shared information This allows for continuous updating of inventory and upcoming requirements, essentially making the end-to-end supply chain process more efficient Efficiency is also created through the decreased expenditures for merchandising, inventory, logistics, and transportation across all trading partners [3] The objective of CPFR is to optimize the supply chain by improving demand forecast accuracy, delivering the right product at the right time to the right location, reducing inventories across the supply chain, avoiding out-ofstocks and improving customer service This can be achieved only if the trading partners are working closely together and willing to share information and risk through a common set of processes The real value of CPFR comes from an exchange of forecasting information rather than from more sophisticated forecasting algorithms to improve forecasting accuracy The fact is that forecasts developed solely by the firm tend to be inaccurate When both the buyer and seller collaborate to develop a single forecast, incorporating knowledge of base sales, promotions, store openings or closings and new product introductions, it is possible to synchronize buyer needs with supplier production plans, thus ensuring efficient replenishment The jointly managed forecasts can be adjusted in the event that demand or promotions have changed, thus avoiding costly corrections after the fact On the surface, when decisions are made with incomplete, one-sided information, it may appear that companies have “optimized” their internal processes when, in reality, inventory has merely shifted along the supply chain Without supply chain trading partners collaborating and exchanging information, the supply chain will always be suboptimal, resulting in less-thanmaximum supply chain profits Using CPFR, companies are working together to develop mutually agreeable plans and are taking responsibility for their actions The collaborative effort leads to benefits that are greater than if each partner were to go at it independently According to VICS, the CPFR concept is consumer driven without losing focus on best practices within the supply chain Setting common goals for organizations pulls individual efforts together into a cohesive plan, supports better execution of the plan and invites improved planning in the next business planning exercise The improved planning drives sales gains through to the consumer and lowers costs throughout the supply chain [4] Besides P&G and Walmart, other companies using CPFR initiatives include Eastman Kodak, Federated Department Stores, Hewlett-Packard, JC Penney, Kimberly Clark, Kmart, Nabisco, Procter & Gamble, Target, Walmart and Warner-Lambert The industries that are most involved with CPFR are consumer products and food & beverage A EDI and Supply Chain Management SCM needs technology-based drivers to make it working Technology is the driver of SCM, and technology tools enable companies to automate supply chain functions to remove redundancies and cost, generate information and assists supply chain activities The earliest technology is electronic data processing (EDI) where companies can exchange simple and similar information within and across-organizations EDI is computer-to-computer exchange of routine business documents, using an approved, standard format, without human intervention These documents include things like purchase orders, shipment updates, invoices and others [5] The process of data exchange is straightforward, beginning with a trading partner’s business system, traveling through the internet, and arriving securely to your system EDI has the capacity to transmit data in the exact way it was received Because of its accuracy, errors occurring while re-keying are no longer a concern As a direct result, costs involved with mailing and postage are virtually eliminated, lead times and inventory carrying costs are drastically reduced, and customer service and loyalty are significantly improved EDI uses a common language that is shared amongst businesses, allowing for companies with dissimilar computer-based systems to communicate with each other Although the language must initially be translated, o Manuscripts that are found to be plagiarized from a manuscript by other authors, whether published or unpublished, will incur plagiarism penalty once it has been completed, no further encoding must be done Many companies have used EDI to send business information to suppliers and customers as illustrated in Fig and Fig illustrated exchange of information through CPFR in SCM Exchange of information in SCM through EDI & CPFR Fig Information flows via EDI Fig Information flows via CPFR In most cases, this information was limited to orders, quotations, invoices, and similar documents In supply chain cooperation, information exchanged between the partners, or granted access to, is much more detailed and often rather sensitive It includes sales plans and forecasts, inventory levels, resource utilization, status of orders, shipments, and more Obviously, companies are concerned about this information Disclosing it to other companies, be they partners in supply chain management or not, is a sensitive matter What if the partner uses internal information to the company’s disadvantage? For example, if the customer sees that the supplier’s inventory level is too high, they might use this information to negotiate a price reduction that the supplier otherwise would not have given Despite the risk of making internal information available, an increasing number of companies perceive the advantages they derive from exchanging information with their supply chain partners They realize that the benefits they receive from effective supply chains outweigh the potential disadvantages from disclosing information Two prominent approaches that unleash the benefits of information exchange between two partners are vendor-managed inventory (VMI) and CPFR [6] SCM is defined as the integrated, process-oriented design, planning and control of goods, information, and cash flows along the entire value chain from customer to the raw-material supplier with the aims of improving customer orientation, synchronizing supply with demand, making the production more flexible and responsive to the demand, and downsizing of the inventory along the value chain [7] The better the supply chain member collaborates, the better the supply chain works And the better the supply chain works, the stronger the partners’ competitive position on the market SCM seeks to develop the collaborative aspects of integrative information technologies to better manage networked customers and inventories B Evolution of SCM or E-SCM Systems Today supply managers expect powerful solutions to their business problems However, organizations did not always have sophisticated systems at their disposal TABLE traces the evolution of e-SCM systems [8] Early uses of information systems were in the accounting and financial areas However, beginning in the 1970s more IT resources and software solutions were allocated to purchasing, operations, and distribution Organizations installed systems such as material requirements planning (MRP) and distribution requirements planning (DRP) These systems were used to improve the planning and control of inventory in manufacturing (MRP) and distribution (DRP) Because MRP and DRP systems were primarily internal, an electronic linkage to suppliers and customers was needed Led by efforts of the railroad and retail sectors, electronic data interchange was developed as a solution to transfer customer and supplier information in the 1980s Although these early efforts provided efficiencies in the supply chain, intense competition in the final two decades of the 20th century forced firms to re-engineer their business processes to become even leaner During this period, almost every major Fortune 500 company went through some form of restructuring, as thousands of workers and managers were shed in an effort to increase productivity and reduce costs In conjunction with this change, organizations further increased their information systems to perform tasks previously done by these workers Thus enterprise resource planning (ERP) systems became the rage of the 1990s and they continue today The goal of ERP systems is to integrate all business function planning and processing, and to avoid data interruption in order to make better business decisions and run the business more effectively and efficiently Ideally, all the different functions in the organization have access to and are working with the same data Supply managers were at the center of this trend and were challenged to develop accurate databases to improve their decision making TABLE THE EVOLUTION OF E-SCM SYSTEMS Solution Time Period Focus Primary Use of System Internal/ managin g inventory Inventory planning, inventory control, and distribution efficiencies MRP-DRP 1970s EDI 1980s External ERP 1990s Internal SRM &SCM 2000s External Collaboration 2001s External -internal Electronic transmission of purchase orders Integration of all business functions for processing and reporting Managing and controlling the interface between buyers, suppliers, and customers CPFR systems permit constant communication within the supply chain o Manuscripts that are found to be plagiarized from a manuscript by other authors, whether published or unpublished, will incur plagiarism penalty Advanced Sourcing Analytics 2010 & Beyond Externalinternal via RFID and point of sale systems Sourcing analytics and computerized negotiations C Collaboration Collaboration can be defined as an activity pursued jointly by two or more entities to achieve a common objective It can mean anything from exchanging raw data by the most basic means, to the periodic sharing of information through technology-based tools, to the structuring of real-time architectures capable of leveraging highly interdependent infrastructures in the pursuit of complex, tightly integrated functions ensuring planning, execution, and information synchronization [9] as shown in Fig The intensity of the collaborative content can vary as depicted in Fig to It can be internally driven and focused on the achievement of local objectives It could seek to use technology to deepen inter-channel operations linkages, drive shared processes and codevelopment, and even foster a common competitive vision for the whole channel The value of collaboration is gauged by how effectively firms are leveraging the competencies of the distributed knowledge of the channel base, reducing redundant functions and wastes, sharing a common vision of the supply chain, and constructing the technical and social architectures, thereby enabling whole channel networks to achieve marketplace leadership to ensure that members of the supply chain will have the right amount of raw materials and finished goods when they need them CPFR streamlines product flow from manufacturing plants all the way to customers’ homes The Voluntary Interindustry Commerce Solutions (VICS) Association (vics.org) describes the structure of CPFR activities and guidelines for implementing them Since 1986, VICS Association has worked to improve the efficiency and effectiveness of supply chains CPFR comprises four main collaboration activities (see Fig 4): Strategy&planning: Setting the ground rules for the collaborative relationship and specifying the product mix Demand&supply management: Forecasting consumer demand and order and shipment requirements over the planning horizon Execution:Performing activities, such as placing orders, shipping and delivery, receiving, stocking, tracking sales transactions, and making payments Analysis: Monitoring outcomes of planning and execution, assessing results and key performance metrics, sharing insights with partners, and adjusting plans to improve results Fig CPFR Model with Retails and Manufacturer Tasks Aligned with Their Corresponding Collaboration Tasks [10] Fig Span of collaboration [9] B What is CPFR? Two prominent approaches that unleash the benefits of information exchange between two partners are vendor-managed inventory (VMI) and CPFR VMI is an approach for close cooperation between a supplier and a vendor based on trust The concepts of continuous replenishment, VMI, and collaboration evolved into the more comprehensive model known as CPFR CPFR is a set of data-driven business processes designed to improve the ability to predict and coordinate with supply chain partners With CPFR, suppliers and retailers collaborate in planning and demand forecasting in order CPFR is an approach for the collaboration of manufacturers and retailers that starts with sales planning Instead of planning separately, both sides exchange their forecasts in the planning phase and discuss diverging estimates in order to come to a single forecast Later, when the sales processes are running, both sides actively work together, allowing them to quickly recognize and correct planning mistakes [11] CPFR was initiated in 1995 in a pilot project by Walmart, the world’s largest chain of department stores, and one of their suppliers In this project, the partners realized that further benefits from industry-trade collaboration would require a standardization of business processes For this reason, Walmart initiated the CPFR Committee of VICS VICS is an inter-industry association, focusing on the improvement of the efficiency and o Manuscripts that are found to be plagiarized from a manuscript by other authors, whether published or unpublished, will incur plagiarism penalty effectiveness of the entire supply chain and the development of cross industry standards Members of the CPFR committee are well-known manufacturers and retailers of consumer goods The mission of the CPFR committee is “ to develop business guidelines and roadmaps for various collaborative scenarios, which include upstream suppliers, suppliers of finished goods and retailers, which integrate demand and supply planning and execution [12].” By integrating processes on the sides of supply and demand, CPFR aims to improve the efficiency, increase revenue, lower tied-up capital, and reduce inventory levels throughout the entire supply chain In order to achieve these goals, a reference model is provided, as shown in Fig This model defines eight major activities where the parties involved should cooperate It includes important steps such as creating a common sales forecast and how to handle exceptional situations, namely: Sales forecasting; Order planning/forecasting; Order generation; Order fulfillment; Exception management; Performance assessment; Collaboration arrangement; Joint business plan During the execution phase, the forecasted requirements are automatically translated into delivery orders, provided that no exceptions apply If, however, a situation is exceptional, the responsible employees on both the retailer’s and manufacturer’s sides have to be informed and work together to find a solution Today, software vendors offer solutions and support for VMI and CPFR, although CPFR does not depend on specific software However, since CPFR partners normally exchange information in electronic form, they should employ common standards (e.g., XML-based standards such as EAN.UCC or EDIFACT [13] Large manufacturers of consumer goods, such P&G has superb supply chains resulting from their use of CPFR As part of a pilot project, P&G shared strategic plans, performance data, and market insights with Walmart.The company realized that it could benefit from Walmart’s market knowledge, just as Walmart could benefit from P&G’s product knowledge as illustrated in Fig [14] processes based on the timely communication of forecasts and inventory replenishment data to support the synchronization of activities necessary to effectively respond to total supply chain demand CPFR begins with the development of an agreement between trading partners to develop a consensus forecast that begins at the retail level and makes it way all the way back to the manufacturer This plan of supply chain demand and replenishment describes what will be sold and when, how it will be merchandized and promoted, in what marketplaces, and during what time period CPFR interoperable technology permits this data to be freely transmitted up and down the supply channel so that planners at any node in the network can see demand and adjust the plan within certain limits based on possible exception conditions, such as promotions, store openings, or capacity constraints that could impact delivery or sales performance anywhere in the channel Trading partners would then collaborate to resolve any potential bottlenecks, adjust demand and replenishment plans, and then execute alternative courses of action The final step in the process, channel replenishment, occurs after consensus on the final forecast Fig Evolution of supply chain planning techniques P&G Walmart Fig Model of CPFR [13] The mission of CPFR is for all partners in a supply channel network to develop collaborative planning In the past, supply chain partners sought to utilize channel inventory management tools such as CRP and VMI to remove excess assets from the supply network and smooth out demand irregularities While effective, these toolsets, however, lacked the ability to solve the twin problems at the core of channel replenishment management: forecast inaccuracies and the capability to utilize exception messaging to notify network partners of impending bumps in supply and demand CPFR provides answers to these two issues by providing for the real-time sharing of sales promotions, point-of-sale (POS) transactions, and total channel inventory positioning that postpones inventory replenishment by linking each level in the supply network with the pull of actual demand In addition, by systematizing the communication of critical demand and supply data among trading partners, CPFR o Manuscripts that are found to be plagiarized from a manuscript by other authors, whether published or unpublished, will incur plagiarism penalty makes visible all plans and planning variances, thereby assisting companies to improve their forecasting and replenishment decisions to yield the best results C Vendor-Managed Inventory (VMI) and CPFR In traditional inventory management, the customer places an order with the supplier when demand for the goods is noticed The order time and quantity are under the control of the customer because the customer monitors the inventory levels It is worth noting the fact that the supplier’s total control of inventory management does not change the ownership of the goods The customer still has to purchase the goods from the supplier to become the owner, or if the goods have only been commissioned, they remain the property of the supplier VMI has advantages for both partners: Important demand and sales information is available to both the retailer and the supplier, transmission errors are reduced, stockouts are avoided, the service level is improved, etc [15] VMI is a process through which the supplier rather than the customer manages the flow of product into the customer’s operations This flow is driven by frequent exchanges of information about the actual off-take or usage of the product by the customer With this information the supplier is able to take account of current inventories at each level in the chain, as well as goods in transit, when determining what quantity to ship and when to ship it The supplier is in effect managing the customer’s inventory on the customer’s behalf In a VMI environment there are no customer orders; instead the supplier makes decisions on shipping quantities based upon the information it receives direct from the point-ofuse or the point-of-sale, or more usually from off-take data at the customer’s distribution center The supplier can use this information to forecast future requirements and hence to utilize their own production and logistics capacity better This is what Walmart and P&G collaborate in managing their supply chain and inventory control CPFR is the name given to a partnership-based approach to managing the buyer-supplier interfaces across the supply chain The idea is a development of VMI [16] VMI is an approach for close cooperation between a supplier and a vendor, based on trust The supplier takes on the responsibility for the customer’s inventory, making a commitment to act in the interest of the customer In the VMI approach, the supplier monitors and maintains the customer’s inventory at an appropriate level [17] This requires the customer to allow the supplier to access their inventory data and provide the supplier with up-to-date point-of-sales data The customer also entrusts the supplier with creating the purchase orders This means that the supplier is in control of the customer’s stock quantities, the replenishment time, and delivery of the goods to the customer Coordination tools focus on supply event management and performance management whereas collaboration tools focus on sharing information to achieve supply goals through CPFR, support for VMI, and support for Supplier Managed Inventory (SMI) The next era in electronic commerce broadcast different applications on the World Wide Web Similar to the events that occurred 20 years earlier, ERP systems were primarily internal and lacked the linkage to suppliers and customers The Internet provided the bridge; because of its low cost, lead software providers developed systems that could link customers and suppliers into the ERP system These systems are popularly termed “supplier relationship management (SRM)” and “customer relationship management (CRM)” systems D RFID Enhances VMI and Affects CPFR Continuous replenishment is a supply chain relationship in which a vendor continuously monitors the inventory of a retailer and distributor and automatically replenishes their inventory when levels hit the re-order point In Walmart’s case, P&G manages the inventory of its Walmart and eliminates the need for customers to send purchase orders [18] Continuous replenishment is a supply chain relationship in which a vendor continuously monitors the inventory of a retailer or distributor and automatically replenishes their inventory when levels hit the re-order point In this vendor managed inventory (VMI) situation, P&G manages the inventory of its Walmart eliminating the need for customers to send purchase orders The advantage to the vendor is having more advanced notice of product demand The advantage to the retailer or distributor is minimizing inventory costs Having the correct item in stock when the end-customer needs it benefits all partners A good example of logistics partnership is the growing use of VMI The underlying principle of VMI is that the supplier rather than the customer assumes responsibility for the flow of product into the customer’s operations [19] The concepts of continuous replenishment and collaboration evolved into the more comprehensive model known as collaborative planning, forecasting, and replenishment (CPFR) CPFR is a set of data-driven business processes designed to improve the ability to predict and coordinate with supply chain partners With CPFR, suppliers and retailers collaborate in planning and demand forecasting in order to ensure that members of the supply chain will have the right amount of raw materials and finished goods when they need them Supply chain monitoring and control is implemented using smart labels (such as passive RFID for tracking and active RFID for cold chains) and VMI [20] E CPFR Reduces Bullwhip Effect Bullwhip effect occurs as orders are placed from retailers, to wholesalers, to manufacturers, with fluctuations increasing at each step in the sequence The “bullwhip” fluctuations in the supply chain increase the costs associated with inventory, transportation, shipping, and receiving while decreasing customer service and profitability Bullwhip effect is the increasing in orders that often occurs as orders move through the supply chain [21] P&G found that although the use of pampers diapers was steady and the retail-store orders had little fluctuation, as o Manuscripts that are found to be plagiarized from a manuscript by other authors, whether published or unpublished, will incur plagiarism penalty orders moved through the supply chain, fluctuation increased By the time orders were initiated for raw materials, the variability was substantial Walmart succeeded in adopting CPFR together with RFID to boost its supply chain has caused reducing the bullwhip effect and improving opportunities in the supply chain III RESEARCH METHODOLOGY Exploratory research was conducted to explore the CPFR technology and the supply chain through related case studies; literatures and textbooks survey related to CPFR, VMI, EDI and supply chain management The literatures and books used in this paper were based on a wide range of online industry sources including P&G and Walmart’s official Web sites, and whitepaper and press releases The online sources were complemented by hardcopy documentation including academic papers such articles and research journals The relevant material was gathered, categorized and sorted into like themes which formed the basis for analyzing how CPFR and related technology boosts and enhances supply chain management Second, descriptive research was conducted to describe characteristics of CPFR technology and supply chain management that have been implemented in Walmart giant store Lastly, the aim of this research is to delve deeply into how the CPFR boosts and enhances Walmart’s supply chain management, and analyze the objective As the previous research journal “How RFID boosts Walmart’s SCM” suggested that this survey covered potential benefits of RFID technologies in supply chains; cost reduction and value creation, particularly related to inventory inaccuracy and the bullwhip effect which RFID technologies can provide several advantages in supply chain management through better traceability and improved visibility of products and processes all along the chains Increase of efficiency and speed of processes, improvement on information accuracy, reduction of inventory losses are some of these advantages There have been important implementations conducted by pioneer companies such as Wal-Mart and Procter & Gamble However, real applications of RFID technologies are still limited because the costs of RFID are still often much larger than the costs of current identification technologies The primary method of data collection in this case study were based on secondary data sources such as articles, journals, etc related to the research purpose Most of the data required through internet and Web browsing (www.walmart.com) Walmart Stores, Inc., based in Bentonville, Arkansas founded by Sam Walton in 1962 Walmart was the world’s largest retailer with more than 6,500 stores worldwide, including stores in all 50 states Its sales volume reached $ 312, billion in 2006 One of Walmart’s major suppliers in this CPFR is P&G “With Walmart selling over $245 billion worth of goods in fiscal year 2003, a 1% improvement in stockouts issue could generate nearly $2.5 billion in very profitable sales.” IV RESULTS AND ANALYSIS Walmart and P&G had initiated its plan to employ CPFR technology in its supply chain in 1995 Subsequently Walmart reinforced its plans and actively asserted on defining the CPFR standards it would be implementing By means of CFPR, P&G logistics executives could easily examine the order patterns for one of their bestselling products “pampers diapers” at any minute at Walmart shelves to real-time inventory monitoring At retail stores, Pampers sales were fluctuating, but the variability was not excessive However, as they examined orders of distributors, the executives were surprised by the higher degree of variability When they looked at P&G’s orders of materials—the manufacturing level—to its suppliers such as 3M, they discovered that the variability in the size of orders were even greater Economists call it a bullwhip because even small increases in demand can cause a big increase in the need for parts and materials further down the supply chain The bullwhip has broad implications as companies rush to fill orders while also restocking warehouse shelves CPFR has transformed the way Walmart ran its retail store The movement of goods along the supply chain was reflected by corresponding movements of information sent by RFID reader, and then proceeded to P&G for managing the inventory Walmart's collaboration with P&G meant that P&G would assume more responsibility for inventory management, something retailers had traditionally done on their own When P&G's products ran low at the distribution centers, the system sent an automatic alert to P&G to ship more products In some cases, the system went all the way to the individual Walmart store It let P&G monitor the shelves through realtime satellite link-ups that sent messages to the factory whenever a P&G item swooped past a scanner at the counter and register With this kind of minute-to-minute information, P&G knew when to make, ship and display more products at the Walmart stores It did not need to keep products piled up in warehouses awaiting Walmart's call Invoicing and payments happened automatically too The system saved P&G so much in time, reduced inventory and lowered order processing costs that it could afford to give Walmart "low, everyday prices" without putting itself out of business P&G used EDI and CPFR for keeping Walmart’s shelves stocked Its supply chains worked smoothly when sales were ready, but often broke down when confronted by a sudden surged in demand, especially when Walmart campaigned a special promotion that caused its shoppers snapped up all the promotional items The RFID tags that supported CPFR could change that by providing real-time information about what was happening on store shelves o Manuscripts that are found to be plagiarized from a manuscript by other authors, whether published or unpublished, will incur plagiarism penalty Here’s in Fig below shows as an example how the system works for P&G’s pampers: Fig P&G uses CPFR &RFID to manage inventory In Fig.7 Box 1: When P&G's products run low at the distribution centers, the system sends an automatic alert to P&G to ship more products In some cases, the system goes all the way to the individual Walmart store It lets P&G monitor the shelves through real-time satellite linkups that send messages to the factory whenever a P&G item swoops past a scanner at the register For instant, each box of Pampers has an RFID tags Shelf-mounted scanners alert the stockroom of urgent need for restock In Fig Box 2: This shows how vendor-managed inventory (VMI) works Continuous replenishment is a supply chain relationship in which a vendor continuously monitors the inventory of Wal-Mart or P&G and automatically replenishes their inventory when levels hit the re-order point In this vendor managed inventory (VMI) situation, P&G manages the inventory of its customers eliminating the need for customers to send purchase orders The advantage P&G is having more advanced notice of product demand The advantage to Wal-Mart or distributor is minimizing inventory costs Having the correct item in stock when the end-customer needs it benefits all partners Wal-Mart’s inventory management system tracks and links its in-store stock and its warehouse stock, prompting quicker replenishment and providing accurate real-time data Here, three main problems of supply chain management that can be improved through RFID; inventory inaccuracy, the bullwhip effect and replenishment policies In Fig Box 3: RFID has transformed the way WalMart runs its retail store The movement of goods along the supply chain is reflected by corresponding movements of information sent by RFID reader This information is captured via a bar code reader and can then be read immediately anywhere in the distribution chain Wal-Mart systems are linked to the P&G supply chain management system Demand spikes reported by RFID tags are immediately visible throughout the supply chain In Fig Box 4: After the deployment of RFID technologies, Procter & Gamble and Wal-Mart simultaneously reduced inventory levels by 70%, improved service levels from 96% to 99% They also reduced administration costs by re-engineering their supply chains P&G’s logistics software tracks its trucks with GPS locators, and tracks their contents with RFID tag readers Regional managers can reroute trucks to fill urgent needs In Fig Box 5: P&G logistics executives examined the order patterns for one of their best-selling products, Pampers diapers P&G’s suppliers also use RFID tags and readers on their raw materials, giving P&G visibility several tiers down the supply chain, and giving the suppliers the ability to accurately forecast demand and production Walmart and P&G have successfully implemented CPFR where is an approach that addresses the requirements for good demand management Walmart has harvested the benefits of CPFR include the following: Strengthens partner relationships with its suppliers P&G where a common forecast of customer demand guides the activities of both partners Collaboration is coordinated, from establishing a common forecast to finding common solutions for operative problems and provides analysis of sales and order forecasts Uses point-of-sale data, seasonal activity, promotions, new product introductions and store openings or closings to improve forecast accuracy Manages the demand chain and proactively eliminates problems before they appear, and allows collaboration on future requirements and plans Companies are enabled to operate proactively, with respect to customer requests, as opposed to reacting to problems when they occur Integrates planning, forecasting and logistics activities where P&G receive guaranteed orders from retailers, while retailers can rely on guaranteed deliveries by the manufacturers because both parties operate on the basis of a common forecast Provides efficient category management and understanding of consumer purchasing patterns Provides analysis of key performance metrics (e.g., forecast accuracy, forecast exceptions, product lead times, inventory turnover, percentage out-of-stocks) to reduce supply chain inefficiencies, improve customer service and increase revenues and profitability Walmart has grown to be the world’s largest retailer by seeking every opportunity to streamline its supply chain and cut costs in order to live up to its promise of “everyday low pricing.” Getting there entails more than merchandising, however Walmart also is a leader in pioneering technologies to achieve operational efficiencies that ultimately bring savings for its customers V CONCLUSION AND PERSPECTIVE The inception of EDI, had made Walmart and P&G using EDI-enabled to leverage existing technology investments to quickly launch CPFR initiatives By the end of the 1990s, however, the high cost of EDI technologies and the ubiquitous deployment of the Internet enabled even the smallest retailer and manufacturer to leverage o Manuscripts that are found to be plagiarized from a manuscript by other authors, whether published or unpublished, will incur plagiarism penalty the collaborative power of CPFR In addition, Web-based applications provided business partners to escape from the one-way transmission of data in favor of an interoperable toolset enabling open two-way conversation in real-time supported by formal standards Nevertheless, VMI has failed to become widely implemented This is due to several reasons where on one hand, no one can decide on appropriate inventory levels as well as the customers themselves And on the other hand, disruptions in the information flow may occur It can happen that important information, such as losing a major customer, is not transmitted to the supplier In addition, when the customer’s and supplier’s information systems are not well integrated, data may need to be explicitly exported from one system and imported into the next, requiring manual editing and conversion to fit the format of the new system Lastly, the effort needed to implement this approach is relatively high, requiring high revenues to make the venture worthwhile This means that VMI is better suited for large partners than for small It does not mean that by adopting CPFR, Walmart can smoothly without challenges The top three challenges for CPFR implementation are difficulty of making internal changes, cost and trust As with any major implementation, internal resistance to change must be addressed by top management Change is always difficult; however, if top management is committed to the project, then the project is much more likely to succeed Companies will need to educate their employees on the benefits of the process changes and the disadvantages of maintaining the status quo There is also the question of reducing the scale of CPFR and, therefore, the cost of implementation for smaller trading partners While cost is an important factor, companies with no plans for adopting CPFR should determine if they are at a competitive disadvantage as more and more companies implement CPFR Trust, a major cultural issue, is considered a big hurdle to widespread implementation of CPFR because many retailers are reluctant to share the type of proprietary information required by CPFR While the suppliers of Walmart, for instance, may be willing to share sensitive data with Walmart, they not want other suppliers to obtain this information However, other experts not believe that trust is the stumbling block for mass adoption of CPFR CPFR won’t shift the power dynamics in a retailer/buyer relationship If people are hoping that this is the case and refer to this as ‘trust,’ then they are fooling themselves Lack of trust is more often related to the unreliable data in systems and the lack of integration internal to retailers and manufacturers Walmart is able to offer consumers an every-day-lowprice largely in part because it is able to control its costs The cost of its products, however, is not only a function of its efficiency or lack of it but also the efficiency/inefficiency of its suppliers Because of the volume of products sold by Walmart, it has a great influence over its suppliers and often pressures its suppliers to find ways to lower costs Sharing benefits and costs in, instead of mandating the use of technology implementations is an effective way for Walmart to cultivate a mutually beneficial relationship with P&G The real challenge to widespread adoption of CPFR is that it requires a fundamental change in the way buyers and sellers work together Companies must ensure that their information technology systems, organizational structures, business processes and internal data are conducive to implementing CPFR For instance, many organizations are hampered by legacy systems that will have to be replaced, lack of executive management support and an unwillingness to share sensitive information REFERENCES [1] Ross, Frederick, David, Introduction to Supply Chain Management Technologies, nd edition, CRC Press, 2011: pp 27-29 [2] The CPFR Model, Voluntary Industry Commerce Standards (VICS) Association: www.vics.org/committees/cpfr/cpfr_model_faqs/ [3] Supply Chain Management Terms and Glossaries—Council of Supply Chain Management Professionals: http://cscmp.org/digital/glossary/document.pdf [4] Http:// www.vics.org accessed on October 20, 2014 [5] [Process Pro: www ProcessProERP.com: p 2] [6] Kurbel, E., Karl, Enterprise Resource Planning and Supply Chain Management: Functions, Business Processes and Software for Manufacturing Companies, 1st edition, 2013, Springer: pp 229-230 [7] Kurbel, E., Karl, Enterprise Resource Planning and Supply Chain Management: Functions, Business Processes and Software for Manufacturing Companies, 1st edition, 2013, Springer: p 223 [8] Robert M Monczka, Robert B Handfield, Larry C Giunipero, James L Patterson, Purchasing and SCM, 4e, 2009, Cengage: pp 668-669 [9] Ross, Frederick, David, Introduction to Supply Chain Management Technologies, nd edition, CRC Press, 2011: p 28 [10] VICS, 2004, p [11] Karl E Kurbel, Enterprise Resource Planning and Supply Chain Management: Functions, Business Processes and Software for Manufacturing Companies, 2013: pp 231-232 [12] http://www.vics.org/committees/cpfr/ [13] VICS, 2004, p 21 [14] Turban, E., and Volonino, L., Information Technology for Management 8th edition, 2012, John Wiley & sons Inc: pp.313-383 [15] Kurbel, E., Karl, Enterprise Resource Planning and Supply Chain Management: Functions, Business Processes and Software for Manufacturing Companies, 1st edition, 2013, Springer: pp 230-231 [16] Christopher, Martin, Logistics & Supply Chain Management, 4th edition, Pearson, 2010: p 94 [17] (Baily et al.2008, pp 180–182) [18] Alexander, Harsono, How RFID Technology Boosts Walmat’s Supply Chain Management, April 6, 2014: p can be accessed at www.academia.edu/AlexanderHarso [19] Waters, Donald, GLOBAL LOGISTICS: New Directions in Supply Chain Management, 6st edition, KoganPage, 2010: p:121 [20] Weiser, Philippe, Francis-Luc Perret, Francis, L, Jaffeux, Corynne, Essentials of Logistics and Management: The Global Supply Chain, 3rd edition, EPFL Press, Swiss, 2013; p 314 [21] Heizer, Jay, and Render Barry, Flexible Edition, Operations Management, edition, 2009, Pearson: pp 451-455 ADDITIONAL READINGS Chopra, S and Meindl, P., Supply Chain Management: Strategy, Planning, and Operation, 5th edition, 2013, Pearson; pp 5-15 Wisner, Joel, T., Tan, Keah, Choon, and Leong G., Keong, Principles of Supply Chain Management: A Balanced Approach, 3rd edition, 2012, Cengage; pp 10-25 Andreas, Meier and Stormer, Hendrik, e-Business and e-Commerce: Managing the Digital Value Chain, 1st edition, 2009, Springer Adolfo, Crespo, Márquez, Dynamic Modelling for Supply Chain Management Dealing with Front-end, Back-end and Integration Issues, 1st edition, 2010, Springer o Manuscripts that are found to be plagiarized from a manuscript by other authors, whether published or unpublished, will incur plagiarism penalty Brown, V., Carol, DeHayes, W., Daniel, Hoffer, A., Jeffrey, Martin, Wainright E., and Perkins, C., William, Managing Information Technology, 7th edition, 2012, Pearson Harrison, Alan, and Van, Hoek, Remko, Logistics Management and Strategy: Competing through the supply chain, 3rd edition, 2008, Pearson Inc Blanchard, David Supply Chain Management: Best Practices, 2nd edition, 2010, John Wiley & Sons John, T Yee, and Seog-Chan Oh, Technology Integration to Business: Focusing on RFID, Interoperability, and Sustainability for Manufacturing, Logistics, and Supply Chain Management, 3rd edition, 2013, SpringerVerlag London , Logistics and Supply Chain Management: Creating ValueAdding Networks, 3rd edition, 2005, Pearson Cousins, Paul, Lamming, Richard, Lawson, Benn, Squire, Brian, Strategic Supply Management: Principles, Theories and Practice, 2nd, 2008, Pearson Inc, Ross, Frederick, David, Introduction to e-Supply Chain Management: Engaging Technology to Build Market-Winning Business Partnerships, 2003, St Lucie Press , The Intimate With Supply Chain: Leveraging the Supply Chain to Manage the Customer Experience, 2008, St Lucie Press , Distribution Planning and Control: Managing In The Era Of Supply Chain Management, 2nd edition, 2004, Kluwer Academic Publishers Myerson, M., Judith, RFID in the Supply Chain: A Guide to Selection and Implementation, 2007, Taylor & Francis Group Meier, Andreas and Stormer, Hendrik, eBusiness & eCommerce: Managing the Digital Value Chain, 2009, Springer Monczka, Robert, M., Handfield, Robert, B., Giunipero, Larry, C., Patterson, James L., Purchasing and Supply Chain Management, 4th edition, 2009, South-Western Palmatier, George E., and Crum Colleen, Enterprise Sales and Operations Planning: Synchronizing Demand, Supply, and Resource For Peak Performance, 2003, J Ross Publishing, Inc David Simchi-Levi, David, Kaminsky, Philip, Simchi-Levi, Edith, Managing the Supply Chain: The Definitive Guide for the Business Professional, 2004, Mcgraw-Hill o Manuscripts that are found to be plagiarized from a manuscript by other authors, whether published or unpublished, will incur plagiarism penalty 10 ... along the supply chain Without supply chain trading partners collaborating and exchanging information, the supply chain will always be suboptimal, resulting in less-thanmaximum supply chain profits... analyzing how CPFR and related technology boosts and enhances supply chain management Second, descriptive research was conducted to describe characteristics of CPFR technology and supply chain management... With Supply Chain: Leveraging the Supply Chain to Manage the Customer Experience, 2008, St Lucie Press , Distribution Planning and Control: Managing In The Era Of Supply Chain Management,