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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, philosophies focused on supply chain synchronization.
and replenishment (CPFR) in supply chain management As illustrated in Fig. 1 to 6, CPFR is the maturation of
have gained significant interest in researchers and efforts such as quick response, vendor managed
academics in recent years. Yet, very few studies conducted inventory (VMI), and efficient customer response and can
on how CPFR software could boost supply chain
management (SCM). So this study was to scrutinize how
be thought of as the perfect joining of ERP and CRM in
Walmart harnessed CPFR to enhance supply chain an Internet-driven supply chain environment dedicated to
management. Exploratory research approach was adopted the integration and synchronization of the entirety of
to obtain an in-depth understanding of CPFR and supply channel demand while reducing total network inventories
chains through related textbooks, journals and literatures. and costs.
Then the research was conducted in the form of case CPFR is a set of data-driven business processes
studies on CPFR and SCM, and the benefits Walmart and designed to improve the ability to predict and coordinate
P&G could gain from CPFR and SCM practices. In general, with supply chain partners. CPFR is considered superior
the research is more descriptive and interpretive in nature. to the earlier electronic data interchange (EDI)-based
Findings showed that CPFR played an important role in
SCM to better control inventory, reduce stockouts, bullwhip
SCM practices since it is based on much broader
effect, reduction in manual orders resulting in a reduction cooperative arrangement where retailers and suppliers
of excess inventory, and improved service levels. The jointly develop forecast by sharing point-of-sales (POS),
paper is original that provides empirical support to CPFR inventory, promotions, strategy and production
and SCM implementation, and creates value for retail stores information. With CPFR, suppliers and retailers
and their suppliers on managing inventory. collaborate in planning and demand forecasting in order
to ensure that members of the supply chain will have the
Keywords—CPFR, EDI, RFID, VMI right amount of raw materials and finished goods when
---------- they need them.
This research paper is an extension research to the previous journal In VMI situation, Procter & Gambler (P&G) manages
research on RFID role in SCM entitled “How RFID Technology Boosts the inventory of its customers, eliminating the need for
Walmart’ SCM” by a single author discussing further on how integrated
IT-enabler powerfull tools such as RFID, VMI, EDI, etc. enhanced SCM. customers to send purchase orders.The advantage to the
vendor is having more advanced notice of product
I. INTRODUCTION demand.The advantage to the retailer or distributor is
The complexity of today’s supply chain requires minimizing inventory costs. Having the correct item in
manufacturers and distributors to search for new methods stock when the end customer needs it benefits all
to reduce costs, increase efficiencies, reinvent channel partners.
models, engineer collaborative relationships, and span One of P&G’s first collaborations was with Walmart.
functional, cultural, and personal boundaries. The most P&G continuously replenished Pampers baby diapers at
common solution to supply chain uncertainties is to build Walmart stores. Continuous replenishment is a supply
inventories, or safety stock, as insurance. High levels of chain relationship in which P&G continuously monitors the
safety stock increase the costs of holding inventory. High inventory of Walmart or distributor and automatically
inventories at multiple points in the supply chain can result replenishes its inventory when levels hit the reorder point.
in the bullwhip effect. Low inventory levels increase the Walmart knows that continued market dominance will
risk of stockouts or insufficient supply and lost revenues go to those who know how to harness the evolutionary
when demand is high or delivery is slow. In either event, process taking place within their supply chains. Therefore,
the total cost—including the cost of holding inventories, the topic “How Walmart harnesses SCM with CPFR
the cost of lost sales opportunities, and bad reputation— initiatives” becomes an interesting issue to discuss.
can be very high. While advance planning and scheduling For further an in-depth exploration of collaboration
(APS) and SCM applications provide for the optimization between Walmart store and its one of suppliers P&G, this
of the supply chain, CPFR seeks to act as a key enabler case study focused on firstly, understanding the concept
for the realization of synchronized supply chain of CPFR, How it works, secondly, identifying the major
forecasting and replenishment. CPFR is the latest elements of Walmart’s CPFR success, and analyze the
generation in a train of channel management
o Manuscripts that are found to be plagiarized from a manuscript by other authors, whether published or unpublished, will incur plagiarism penalty
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using an approved. costs involved with forecasting information rather than from more mailing and postage are virtually eliminated. CPFR is a registered trademark of the VICS Association. straightforward. EDI has the capacity to together and willing to share information and risk through transmit data in the exact way it was received. right product at the right time to the right location. As a direct result. acceptance of common performance metrics collaborating and exchanging information. These documents by improving demand forecast accuracy. JC Penney. thus ensuring efficient replenishment. essentially making the end-to-end supply earliest technology is electronic data processing (EDI) chain process more efficient. will incur plagiarism penalty 2 . delivering the include things like purchase orders. Unified incomplete. businesses. beginning with a trading partner’s stocks and improving customer service. it is other. network partners to engage in and constantly enhance On the surface. Nabisco. According to VICS. of its accuracy. it may appear that channel collaboration makes it easier to ensure companies have “optimized” their internal processes connectivity of all channel nodes. solely by the firm tend to be inaccurate. o Manuscripts that are found to be plagiarized from a manuscript by other authors. allowing for companies with dissimilar incorporating knowledge of base sales. business documents. invites improved planning in the next business planning According to the Voluntary Inter-industry Commerce exercise. inventory has merely shifted along the technology tools for information visibility and real-time supply chain. Walmart and Warner-Lambert. assisting joint practices. inventory. shipment updates. Procter & The Council of Supply Chain Management Professionals Gamble. Without supply chain trading partners transfer. Kimberly Clark. reducing invoices and others [5]. This allows for functions to remove redundancies and cost. When both the EDI uses a common language that is shared amongst buyer and seller collaborate to develop a single forecast. The jointly managed forecasts can be adjusted in the II. and achieved only if the trading partners are working closely arriving securely to your system. Technology is the driver of SCM. Hewlett-Packard. production plans. Efficiency is also created where companies can exchange simple and similar through the decreased expenditures for merchandising. and technology in planning and satisfying customer demands through a tools enable companies to automate supply chain supportive system of shared information. lead times sophisticated forecasting algorithms to improve and inventory carrying costs are drastically reduced. information within and across-organizations. Kmart. when decisions are made with collaborative relationships with each other. LITERATURE SURVEY event that demand or promotions have changed. The (CSCMP) describes CPFR as: a concept that aims to industries that are most involved with CPFR are enhance supply chain integration by supporting and consumer products and food & beverage. The collaborative effort Despite that fact that such numbers indicate that truly leads to benefits that are greater than if each partner were cohesive and collaborative supply chain teams are the to go at it independently. the supply and benefits. Besides P&G and Walmart. avoiding out-of. maximum supply chain profits. The requirements. one-sided information. The process of data exchange is inventories across the supply chain. companies are working together to is recognized as a high-corporate priority. the CPFR exception and not the rule. standard The objective of CPFR is to optimize the supply chain format. and forecasting accuracy. responsibility for their actions. The fact is that forecasts developed customer service and loyalty are significantly improved.” Kodak. generate continuous updating of inventory and upcoming information and assists supply chain activities. traveling through the internet. store computer-based systems to communicate with each openings or closings and new product introductions. Federated Department Stores. Collaboration is one of the key foundations of SCM and Using CPFR. availability of the proper when. promotions. supports better execution of the plan and collaboration [1].benefits of the CPFR implementation for both Walmart possible to synchronize buyer needs with supplier and P&G. EDI and Supply Chain Management management of inventory through joint visibility and replenishment of products throughout the supply chain. CPFR seeks cooperative A. Setting common goals the competition because they understand their success for organizations pulls individual efforts together into a rests on seeing themselves as the drivers of value chain cohesive plan. resulting in less-than- expectations as they stream across the supply chain. the path to develop mutually agreeable plans and are taking successful collaboration is blocked by many barriers. Although the language must initially be translated. logistics. errors occurring while re-keying are no The real value of CPFR comes from an exchange of longer a concern. other for collaboration on a number of retailer/manufacturer companies using CPFR initiatives include Eastman functions towards overall efficiency in the supply chain. This can be business system. today’s advanced supply chain concept is consumer driven without losing focus on best leaders P&G and Wal-Mart are winning and outdistancing practices within the supply chain. whether published or unpublished. CPFR is “a set of through to the consumer and lowers costs throughout the business processes that entities in a supply chain can use supply chain [4]. Because a common set of processes. and access to demand patterns and chain will always be suboptimal. The improved planning drives sales gains Standards (VICS) Association [2]. Target. in reality. without human intervention. SCM needs technology-based drivers to make it Information shared between suppliers and retailers aids working. thus The keystone of SCM is the willingness of supply avoiding costly corrections after the fact. and transportation across all trading EDI is computer-to-computer exchange of routine partners [3].

Because MRP and DRP systems were primarily internal. as thousands of orders. organizations did not Fig. through CPFR in SCM. synchronizing supply with demand. and customer orientation. Disclosing it to other productivity and reduce costs. the raw-material supplier with the aims of improving MRP-DRP 1970s managin inventory control. status of through some form of restructuring. Led by efforts of the railroad and retail sectors. be they partners in supply chain management change. Obviously. g distribution efficiencies making the production more flexible and responsive to the inventory Electronic transmission of demand. beginning in the 1970s more IT resources and software solutions were allocated to purchasing.once it has been completed. and distribution. The goal of ERP systems is to integrate all negotiate a price reduction that the supplier otherwise business function planning and processing. Information flows via CPFR the 1980s. and Solution Time Focus Primary Use of System Period cash flows along the entire value chain from customer to Internal/ Inventory planning. and inventories. Evolution of SCM or E-SCM Systems done. and more. and downsizing of the inventory along the value EDI 1980s External purchase orders chain [7]. almost every major Fortune 500 company went forecasts. no further encoding must be B. THE EVOLUTION OF E-SCM SYSTEMS SCM is defined as the integrated. operations. an electronic linkage to suppliers and customers was needed. Information flows via EDI control of inventory in manufacturing (MRP) and distribution (DRP). 1 and Fig. intense competition in the final two decades chain cooperation. 2 illustrated exchange of information always have sophisticated systems at their disposal. What if the partner uses systems to perform tasks previously done by these internal information to the company’s disadvantage? For workers. organizations further increased their information or not. electronic data interchange was developed as a solution to transfer customer and supplier information in Fig. And the Integration of all business better the supply chain works. The better the supply chain member collaborates. However. Supply managers were at the center of this outweigh the potential disadvantages from disclosing trend and were challenged to develop accurate databases information. if the customer sees that the supplier’s inventory systems became the rage of the 1990s and they continue level is too high. Thus enterprise resource planning (ERP) example. process-oriented design. Although these early efforts provided efficiencies in the quotations. Many companies have used EDI to send business Today supply managers expect powerful solutions to information to suppliers and customers as illustrated in their business problems. whether published or unpublished. this information was limited to orders. invoices. suppliers. the stronger the partners’ ERP 1990s Internal functions for processing and reporting competitive position on the market. In supply supply chain. planning and control of goods. However. Ideally. 2. customers CPFR systems permit Collaboration 2001s External constant communication -internal within the supply chain o Manuscripts that are found to be plagiarized from a manuscript by other authors. During this often rather sensitive. information. Two prominent approaches that unleash the to improve their decision making. information exchanged between the of the 20th century forced firms to re-engineer their partners. They realize organization have access to and are working with the that the benefits they receive from effective supply chains same data. benefits of information exchange between two partners are vendor-managed inventory (VMI) and CPFR [6] TABLE 1. companies are workers and managers were shed in an effort to increase concerned about this information. the better the supply chain works. is a sensitive matter. they might use this information to today. In conjunction with this companies. TABLE 1 traces the evolution of e-SCM systems [8]. Early uses of information systems were in the accounting and Exchange of information in SCM through EDI & CPFR financial areas. Despite the risk of making internal data interruption in order to make better business information available. In most cases. inventory levels. shipments. These systems were used to improve the planning and Fig. will incur plagiarism penalty 3 . It includes sales plans and period. or granted access to. Organizations installed systems such as material requirements planning (MRP) and distribution requirements planning (DRP). resource utilization. all the different functions in the information with their supply chain partners. is much more detailed and business processes to become even leaner. an increasing number of companies decisions and run the business more effectively and perceive the advantages they derive from exchanging efficiently. 1. and similar documents. SCM seeks to develop Managing and controlling the collaborative aspects of integrative information SRM &SCM 2000s External the interface between technologies to better manage networked customers and buyers. and to avoid would not have given.

CPFR by the most basic means. when the sales processes are running. sharing a common vision of the supply chain. 3. competencies of the distributed knowledge of the channel base. and even foster a common competitive execution. stocking. Collaboration (VICS) Association (vics. and adjusting gauged by how effectively firms are leveraging the plans to improve results. the partners replenishment. allowing them to quickly of information exchange between two partners are recognize and correct planning mistakes [11]. such as placing orders. Two prominent approaches that unleash the benefits both sides actively work together. CPFR streamlines product flow from Analytics negotiations manufacturing plants all the way to customers’ homes. Instead of planning separately. The concepts of continuous and one of their suppliers. In this project. CPFR is a collaboration would require a standardization of business set of data-driven business processes designed to processes. jointly by two or more entities to achieve a common Since 1986. and information synchronization [9] demand and order and shipment requirements over the as shown in Fig 3. both sides exchange their forecasts in the planning phase and B. CPFR Model with Retails and Manufacturer Tasks Aligned with Their Corresponding Collaboration Tasks [10] CPFR is an approach for the collaboration of manufacturers and retailers that starts with sales Fig. depicted in Fig. tightly integrated functions ensuring 2. execution. whether published or unpublished. and making payments operations linkages. Sourcing analytics and Sourcing Beyond internal computerized they need them. suppliers and retailers focusing on the improvement of the efficiency and collaborate in planning and demand forecasting in order o Manuscripts that are found to be plagiarized from a manuscript by other authors. VMI. The value of collaboration is metrics. assessing results and key performance vision for the whole channel. It can mean anything from exchanging raw data efficiency and effectiveness of supply chains.org) describes the structure of Collaboration can be defined as an activity pursued CPFR activities and guidelines for implementing them. Strategy&planning: Setting the ground rules for the leveraging highly interdependent infrastructures in the collaborative relationship and specifying the product mix pursuit of complex. Walmart initiated the CPFR improve the ability to predict and coordinate with supply Committee of VICS. 4. via RFID and point of sale to ensure that members of the supply chain will have the systems right amount of raw materials and finished goods when Advanced 2010 & External. It could seek to use technology to deepen inter-channel sales transactions. chain partners. reducing redundant functions and wastes. the world’s largest chain of department stores. VMI is an CPFR was initiated in 1995 in a pilot project by approach for close cooperation between a supplier and a Walmart. and constructing the 1 technical and social architectures. Execution:Performing activities. The Voluntary Interindustry Commerce Solutions C. will incur plagiarism penalty 4 . Span of collaboration [9] planning. and collaboration evolved into the realized that further benefits from industry-trade more comprehensive model known as CPFR. 3 to 5. thereby enabling whole 4 channel networks to achieve marketplace leadership 3 2 Fig. VICS Association has worked to improve the objective. It can be internally driven and shipping and delivery. sharing insights with partners. drive shared processes and co. receiving. 4): information through technology-based tools. Demand&supply management: Forecasting consumer planning. vendor based on trust. tracking focused on the achievement of local objectives. What is CPFR? discuss diverging estimates in order to come to a single forecast. Later. Analysis: Monitoring outcomes of planning and development. to the structuring of real-time architectures capable of 1. With CPFR. VICS is an inter-industry association. For this reason. 4. vendor-managed inventory (VMI) and CPFR. to the periodic sharing of comprises four main collaboration activities (see Fig. planning horizon The intensity of the collaborative content can vary as 3.

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.effectiveness of the entire supply chain and the processes based on the timely communication of development of cross industry standards. The Collaboration arrangement. whether published or unpublished. transmitted up and down the supply channel so that In order to achieve these goals. which manufacturer. and reduce inventory interoperable technology permits this data to be freely levels throughout the entire supply chain. It includes important steps such as creating a openings. and market insights with Walmart. in what demand. software vendors offer solutions and support for VMI and CPFR. and during what time period. Order fulfillment. XML-based standards such as EAN. 6. requirements are automatically translated into delivery orders. 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. This model defines eight adjust the plan within certain limits based on possible major activities where the parties involved should exception conditions. plans. by systematizing the communication of critical channel network to develop collaborative planning demand and supply data among trading partners. 5. which include upstream the retail level and makes it way all the way back to the suppliers.. however. how [12]. While effective. a reference model is planners at any node in the network can see demand and provided. lower tied-up capital. or capacity constraints that could impact common sales forecast and how to handle exceptional delivery or sales performance anywhere in the channel. since CPFR partners normally exchange information in electronic form. CPFR o Manuscripts that are found to be plagiarized from a manuscript by other authors. This plan of supply chain demand and integrate demand and supply planning and execution replenishment describes what will be sold and when. respond to total supply chain demand. they should employ common standards (e.g. In The mission of CPFR is for all partners in a supply addition.. channel replenishment. 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. Order Trading partners would then collaborate to resolve any planning/forecasting. potential bottlenecks. just as Walmart could benefit from P&G’s product knowledge as illustrated in Fig. 5 [14] Fig. However. although CPFR does not depend on specific software.to develop the development of an agreement between trading business guidelines and roadmaps for various partners to develop a consensus forecast that begins at collaborative scenarios. As part of a pilot project. CPFR provides answers to these two issues by providing for the real-time sharing of sales promotions. the forecasted after consensus on the final forecast. adjust demand and replenishment Exception management. such P&G has superb supply chains resulting from their use of CPFR. Order generation. Model of CPFR [13] postpones inventory replenishment by linking each level in the supply network with the pull of actual demand. these toolsets. Performance assessment. performance data. Today. as shown in Fig. Evolution of supply chain planning techniques Walmart P&G In the past. and total channel inventory positioning that Fig. will incur plagiarism penalty 5 . If.The company realized that it could benefit from Walmart’s market knowledge. CPFR aims to improve the efficiency. situations. however. Joint business plan final step in the process. Large manufacturers of consumer goods. suppliers of finished goods and retailers. point-of-sale (POS) transactions. and then execute alternative courses of action. increase marketplaces.UCC or EDIFACT [13]. CPFR begins with The mission of the CPFR committee is “. such as promotions. namely: Sales forecasting. store cooperate. CPFR revenue. Members of the forecasts and inventory replenishment data to support the CPFR committee are well-known manufacturers and synchronization of activities necessary to effectively retailers of consumer goods. 4.. occurs During the execution phase. P&G shared strategic plans. provided that no exceptions apply.” By integrating processes on the sides of supply and it will be merchandized and promoted.

the events that occurred 20 years earlier. based on trust. support for VMI. shipping. RFID Enhances VMI and Affects CPFR does not change the ownership of the goods. ERP systems were primarily internal and lacked the linkage to suppliers C. to manufacturers. transportation. making materials and finished goods when they need them. The customer also entrusts the Bullwhip effect occurs as orders are placed from supplier with creating the purchase orders. because of its low cost. CPFR replenishment (CPFR). thereby The next era in electronic commerce broadcast assisting companies to improve their forecasting and different applications on the World Wide Web. forecasting. The Internet provided the bridge. usage of the product by the customer. The underlying upon the information it receives direct from the point-of. lead software providers developed systems In traditional inventory management. or if the goods have only been inventory of a retailer and distributor and automatically commissioned. as well as goods in advantage to the vendor is having more advanced notice transit. monitors the inventory levels.makes visible all plans and planning variances. With this P&G manages the inventory of its Walmart eliminating the information the supplier is able to take account of current need for customers to send purchase orders. This is what Walmart and P&G collaborate in known as collaborative planning. In Walmart’s case. stockouts purchase orders [18] are avoided. The quantities. The advantage to the retailer or to ship it. This flow is driven by frequent replenishes their inventory when levels hit the re-order exchanges of information about the actual off-take or point. replenishes their inventory when levels hit the re-order VMI has advantages for both partners: Important demand point. costs associated with inventory. This means retailers. CPFR is a set of data-driven is the name given to a partnership-based approach to business processes designed to improve the ability to managing the buyer-supplier interfaces across the supply predict and coordinate with supply chain partners. transmission errors are reduced. P&G manages the inventory of and sales information is available to both the retailer and its Walmart and eliminates the need for customers to send the supplier. the service level is improved. as o Manuscripts that are found to be plagiarized from a manuscript by other authors. This RFID for cold chains) and VMI [20] requires the customer to allow the supplier to access their E. Similar to replenishment decisions to yield the best results. etc. and support for Supplier P&G found that although the use of pampers diapers was Managed Inventory (SMI). they remain the property of the supplier. and managing their supply chain and inventory control. with that the supplier is in control of the customer’s stock fluctuations increasing at each step in the sequence. It is worth noting the fact that the supplier’s total control of inventory management D. steady and the retail-store orders had little fluctuation. CPFR Reduces Bullwhip Effect inventory data and provide the supplier with up-to-date point-of-sales data. The Continuous replenishment is a supply chain customer still has to purchase the goods from the supplier relationship in which a vendor continuously monitors the to become the owner. or more usually from off-take data customer assumes responsibility for the flow of product at the customer’s distribution center. and delivery of the “bullwhip” fluctuations in the supply chain increase the goods to the customer. The order time and quantity are under relationship management (SRM)” and “customer the control of the customer because the customer relationship management (CRM)” systems. The inventories at each level in the chain. principle of VMI is that the supplier rather than the use or the point-of-sale. [15] Continuous replenishment is a supply chain VMI is a process through which the supplier rather than relationship in which a vendor continuously monitors the the customer manages the flow of product into the inventory of a retailer or distributor and automatically customer’s operations. suppliers and retailers collaborate in planning and VMI is an approach for close cooperation between a demand forecasting in order to ensure that members of supplier and a vendor. Coordination tools focus on supply event management and receiving while decreasing customer service and and performance management whereas collaboration profitability. A good example of logistics supplier makes decisions on shipping quantities based partnership is the growing use of VMI. The supplier can use into the customer’s operations [19]. to wholesalers. the customer that could link customers and suppliers into the ERP places an order with the supplier when demand for the system. CPFR. instead the benefits all partners. Having the customer’s inventory on the customer’s behalf. The idea is a development of VMI [16]. With chain. through CPFR. this information to forecast future requirements and hence The concepts of continuous replenishment and to utilize their own production and logistics capacity collaboration evolved into the more comprehensive model better. the replenishment time. The supplier is in effect managing the distributor is minimizing inventory costs. In this vendor managed inventory (VMI) situation. In a VMI correct item in stock when the end-customer needs it environment there are no customer orders. Vendor-Managed Inventory (VMI) and CPFR and customers. Bullwhip effect is the increasing in orders that tools focus on sharing information to achieve supply goals often occurs as orders move through the supply chain [21]. These systems are popularly termed “supplier goods is noticed. will incur plagiarism penalty 6 . whether published or unpublished. the supplier monitors and maintains the smart labels (such as passive RFID for tracking and active customer’s inventory at an appropriate level [17]. when determining what quantity to ship and when of product demand. a commitment to act in the interest of the customer. The supplier takes the supply chain will have the right amount of raw on the responsibility for the customer’s inventory. In the Supply chain monitoring and control is implemented using VMI approach.

Walmart was the world’s largest retailer with sales were ready. The selling products “pampers diapers” at any minute at literatures and books used in this paper were based on a Walmart shelves to real-time inventory monitoring. Walmart Stores. 4 billion in campaigned a special promotion that caused its shoppers 2006. and whitepaper and press variability was not excessive. a 1% improvement in stockouts information about what was happening on store shelves. research is to delve deeply into how the CPFR boosts and CPFR has transformed the way Walmart ran its enhances Walmart’s supply chain management. the aim of this orders while also restocking warehouse shelves. The online sources were complemented by orders of distributors. The RFID tags that P&G. Its supply chains worked smoothly when in 1962. related to the research purpose. whether published or unpublished.5 billion in very profitable increased. o Manuscripts that are found to be plagiarized from a manuscript by other authors.com). It did not need to are still limited because the costs of RFID are still often keep products piled up in warehouses awaiting Walmart's much larger than the costs of current identification call. Arkansas founded by Sam Walton shelves stocked. real applications of RFID technologies more products at the Walmart stores. technology boosts and enhances supply chain Economists call it a bullwhip because even small management. EDI and supply chain management. Walmart store.500 stores worldwide. journals. and retail store. afford to give Walmart "low. browsing (www. The technology and supply chain management that have been bullwhip has broad implications as companies rush to fill implemented in Walmart giant store. With this kind of minute-to-minute pioneer companies such as Wal-Mart and Procter & information. descriptive research was increases in demand can cause a big increase in the need conducted to describe characteristics of CPFR for parts and materials further down the supply chain. the system went all the way to the individual chains. III. particularly related to inventory management. the variability was substantial. When P&G's products ran technologies can provide several advantages in supply low at the distribution centers. “With Walmart selling over $245 billion worth of supported CPFR could change that by providing real-time goods in fiscal year 2003. P&G logistics executives could case studies. will incur plagiarism penalty 7 . fluctuation issue could generate nearly $2. Inc. At wide range of online industry sources including P&G and retail stores. The movement of goods along the supply chain analyze the objective. RESEARCH METHODOLOGY Subsequently Walmart reinforced its plans and actively asserted on defining the CPFR standards it would be Exploratory research was conducted to explore the implementing. everyday prices" without Most of the data required through internet and Web putting itself out of business. P&G used EDI and CPFR for keeping Walmart’s based in Bentonville.walmart. Second. but often broke down when confronted more than 6.. There whenever a P&G item swooped past a scanner at the have been important implementations conducted by counter and register.” materials. meant that P&G would assume more responsibility for cost reduction and value creation. Increase of efficiency and speed of processes. categorized and sorted into like themes which its suppliers such as 3M. reduced The primary method of data collection in this case inventory and lowered order processing costs that it could study were based on secondary data sources such as articles. Its sales volume reached $ 312. The system saved P&G so much in time. The relevant material was P&G’s orders of materials—the manufacturing level—to gathered. CPFR technology and the supply chain through related By means of CFPR. technologies. the executives were surprised by hardcopy documentation including academic papers such the higher degree of variability. One of Walmart’s major suppliers in this CPFR is snapped up all the promotional items.orders moved through the supply chain. especially when Walmart 50 states. Invoicing and payments happened automatically too. literatures and textbooks survey related to easily examine the order patterns for one of their best- CPFR. However. In some improved visibility of products and processes all along the cases. By the time orders were initiated for raw sales. Walmart succeeded in adopting CPFR together with RFID to boost IV. CPFR technology in its supply chain in 1995. something retailers had inventory inaccuracy and the bullwhip effect which RFID traditionally done on their own. etc. ship and display Gamble. RESULTS AND ANALYSIS its supply chain has caused reducing the bullwhip effect Walmart and P&G had initiated its plan to employ and improving opportunities in the supply chain. reduction of time satellite link-ups that sent messages to the factory inventory losses are some of these advantages. When they looked at articles and research journals. Walmart's collaboration with P&G potential benefits of RFID technologies in supply chains. including stores in all by a sudden surged in demand. It let P&G monitor the shelves through real- improvement on information accuracy. However. and then proceeded to P&G for Walmart’s SCM” suggested that this survey covered managing the inventory. the system sent an chain management through better traceability and automatic alert to P&G to ship more products. VMI. Lastly. they discovered that the formed the basis for analyzing how CPFR and related variability in the size of orders were even greater. Pampers sales were fluctuating. P&G knew when to make. as they examined releases. but the Walmart’s official Web sites. was reflected by corresponding movements of information As the previous research journal “How RFID boosts sent by RFID reader.

Walmart also is a leader in chain. service and increase revenues and profitability. The advantage P&G is having more advanced where P&G receive guaranteed orders from retailers. and giving the 2 3 suppliers the ability to accurately forecast demand and 1 production. It lets common forecast to finding common solutions for P&G monitor the shelves through real-time satellite link. giving P&G visibility several tiers down the supply chain. Wal-Mart’s inventory management 7. P&G manages the inventory of its customers problems when they occur eliminating the need for customers to send purchase 6.g. Regional managers can reroute trucks to fill system works for P&G’s pampers: urgent needs. will incur plagiarism penalty 8 . percentage out-of-stocks) to bullwhip effect and replenishment policies. Walmart and P&G have successfully implemented 5 CPFR where is an approach that addresses the 4 requirements for good demand management. product lead improved through RFID. the system sends an automatic alert guides the activities of both partners to P&G to ship more products. Having the manufacturers because both parties operate on the correct item in stock when the end-customer needs it basis of a common forecast. P&G uses CPFR &RFID to manage inventory 1. and allows collaboration monitors the inventory of Wal-Mart or P&G and on future requirements and plans automatically replenishes their inventory when levels hit 5. from establishing a goes all the way to the individual Walmart store. Demand spikes reported by efficiencies that ultimately bring savings for its customers. reduce supply chain inefficiencies. Uses point-of-sale data. with the re-order point. as opposed to reacting to situation. inventory inaccuracy. V. closings to improve forecast accuracy In Fig. forecasting and logistics activities orders. Continuous replenishment is a 4. Procter & Gamble and Wal-Mart using EDI-enabled to leverage existing technology simultaneously reduced inventory levels by 70%. Box 1: When P&G's products run low at the P&G where a common forecast of customer demand distribution centers. 7. investments to quickly launch CPFR initiatives. however. whether published or unpublished. 3. 7 Box 3: RFID has transformed the way Wal. 7 Box 5: P&G logistics executives examined the order patterns for one of their best-selling products. however. Mart runs its retail store. This and cut costs in order to live up to its promise of “everyday information is captured via a bar code reader and can low pricing. Provides efficient category management and system tracks and links its in-store stock and its understanding of consumer purchasing patterns warehouse stock. forecast exceptions. and tracks their contents with RFID tag o Manuscripts that are found to be plagiarized from a manuscript by other authors. CONCLUSION AND PERSPECTIVE In Fig. By the end improved service levels from 96% to 99%. the high cost of EDI technologies reduced administration costs by re-engineering their and the ubiquitous deployment of the Internet enabled supply chains. Manages the demand chain and proactively eliminates supply chain relationship in which a vendor continuously problems before they appear. In some cases. P&G’s logistics software tracks its trucks even the smallest retailer and manufacturer to leverage with GPS locators. In this vendor managed inventory (VMI) respect to customer requests. 7 below shows as an example how the readers. improve customer In Fig. In Fig. inventory turnover. benefits all partners. The movement of goods along Walmart has grown to be the world’s largest retailer by the supply chain is reflected by corresponding seeking every opportunity to streamline its supply chain movements of information sent by RFID reader. Here. Provides analysis of key performance metrics (e. promotions. Collaboration is coordinated. the system 2. operative problems and provides analysis of sales and ups that send messages to the factory whenever a P&G order forecasts item swoops past a scanner at the register. Companies are enabled to operate proactively.” Getting there entails more than then be read immediately anywhere in the distribution merchandising. each box of Pampers has an RFID tags. seasonal activity.7. three main 8. The advantage to Wal-Mart or while retailers can rely on guaranteed deliveries by the distributor is minimizing inventory costs. problems of supply chain management that can be forecast accuracy. RFID tags are immediately visible throughout the supply chain. 7 Box 4: After the deployment of RFID The inception of EDI.. prompting quicker replenishment and providing accurate real-time data. They also of the 1990s. Pampers diapers. had made Walmart and P&G technologies. Strengthens partner relationships with its suppliers In Fig. Integrates planning. the times. notice of product demand. Walmart has harvested the benefits of CPFR include the following: Fig. Shelf-mounted new product introductions and store openings or scanners alert the stockroom of urgent need for restock. Wal-Mart systems are linked to the P&G supply pioneering technologies to achieve operational chain management system.Here’s in Fig. P&G’s suppliers also use RFID tags and readers on their raw materials. For instant. 7 Box 2: This shows how vendor-managed inventory (VMI) works.

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