In my last article, we began providing examples of MEC (multi-enterprise collaboration) supply chain initiatives whose processes had been standardized. Here, we continue our examples of standardized MEC.

STANDARDIZED MEC MODELS: CPFR

Last time, we discussed how vendor managed inventory (VMI) is used to assist buyers and sellers in their efforts to avoid stockouts while still minimizing inventory. But, VMI—for all its good points—still does not provide the level of information availability that is possible or beneficial. In addition, it fails to employ the kind of collaborative analysis that could really fine-tune the process. As a result, a process known as collaborative planning, forecast, and replenishment (CPFR) has been defined. Like VMI, it speaks to the need of the seller to have visibility into what is being sold at POS and the inventory levels of stock at stores and DCs.

But, CPFR goes well beyond mere information visibility. [That would only utilize the availability component of MEC.] CPFR also defines a process for the analysis and application of the shared information to mutually benefit its practitioners. The planning and forecasting portions of CPFR define how the buyer and seller will share views of anticipated inventory drawdown rates and purchasing behaviors, compare those to historical patterns, identify and resolve anomalies and agree on expected inventory needs. [Figure 1] With this more collaborative analysis of the information, the seller can more effectively apply the results of that analysis to its manufacturing mix, production cycles, etc. The result is one step closer to the perfect order.

*1

The promise of CPFR to vastly improve the retail supply ecosystem is nothing short of remarkable. And, its applicability to buyer/seller interaction is broad. CPFR is useful for retail event collaboration to facilitate promotions, new item introductions, item rollovers new store openings, etc. It can be used for store and/or DC replenishment collaboration avoiding overstocks and stockouts. Finally, it is well suited to enabling collaborative assortment planning to optimize sell-through at the store level.

STANDARDIZED MEC MODELS: RFID

More promise than practice as of this writing, RFID (radio frequency identification) sets the stage for extensive information availability, analysis, and action among entities within a supply ecosystem. Similar to the function of the bar code, an RFID provides an ID that allows anyone in the ecosystem to recognize what a given product, case, pallet, etc. is. But, unlike the bar code, it can be read without direct line of sight. And, unlike the bar code, the RFID tag [Figure 2] contains an EPC (electronic product code) that provides a specific serial number that identifies each specific instance of a product.*2

*3