Leading the Horses to Water . . . How will CPFR gain momentum? Certainly the growing awareness of collaboration benefits—illustrated by the case studies and examples in this article—will help inspire new, deeper one-to-one partnerships between suppliers and
customers. Moving beyond this rather deliberate “dating game” initiated by one or the other party, there are two emerging—some would say conflicting—business models that are expected to spur the pace of value chain collaboration.
• CPFR adoption by e-marketplaces
• “Napsterization” with peer-to-peer collaboration

Some believe that the e-marketplaces, or net markets, may provide the most
promising environment for CPFR, soon accelerating its adoption by many large
companies. Based on a “many-to-many” e-business model, the leading net marketplaces have evolved from independently run trading exchanges focused on spot transactions for indirect materials, to consortia of major industry players interested in extensive collaboration around direct material procurement and fulfillment. For example, major consumer product e-marketplaces such as Worldwide Retail Exchange (WWRE), Global NetXchange, and Transora have committed to offer CPFR, and some believe that their formal endorsement will stimulate large-scale global adoption of collaborative practices over the next two years.

By doing so, these e-marketplaces expect to dramatically improve their participants’ ease of entry into CPFR and attract new participants by building the infrastructure once for all players, providing a common product catalog, and offering CPFR as a standard service. According to Larry Lapide of AMR Research, “B2B exchanges can also improve visibility to all of a company’s trading partners from one point of access, and allow the efficient development of common standards and normalized data formats for calendars, product codes, location codes, and scorecarding criteria.” E-businesses focusing on transportation services also see collaboration adding value in the future. “By providing an efficient hub for collaboration between shippers and transportation providers, we’ll help translate customer shipment forecasts into more predictable demand for equipment —containers, chassis, and ships—allowing carriers to deploy their global assets more effectively,” says Vijay Sundaram, vice presi-dent of marketing for Tradiant, which is hosting the Global Transportation Network (GTN) for nine major ocean carriers.

Peer-to-peer collaboration may enhance the e-marketplace applications, or
completely run around it. Andrew White of Logility explains: “Peer-to-peer is a very exciting development for CPFR because it has the potential to create what some have called the ‘Napsterization of the supply chain.’ It’s very different from one-to-one interactions where the connections were like tunnels that were closed, and independent from other tunnels. In peer-to-peer, you don’t need a centralized server at all; each peer operates independently and in an open manner. Files on one peer site are secured from the preying eyes of companies that you do not want to do business with. File formats are standardized, and files are interchanged between trading partners on a push or pull basis as needed. No middle service (such as a net market) is needed to facilitate the flow of documents and other media; however, a universal registry of participants and their interests (such as UCCnet.org for consumer packaged goods companies) is critical.”

One of the most promising providers of peer-to-peer software is Groove Networks www.groove.net, founded by Lotus Notes inventor Ray Ozzie. Groove currently offers a free preview edition of its “shared workspace,” encompassing voice conferencing, document sharing, calendars, active white boards, and other collaborative tools. The company is working with initial pilot customers, and will begin selling its product more broadly later this year. With an open architecture platform and full support for standard data formats and protocols, Groove sees its value in adding a “person-to-person interaction layer” in conjunction with centralized web-based business systems. This has two important implications for CPFR activities, according to Bob Anderson, Business Evangelist at Groove. “A peer-to-peer solution like Groove tackles the ‘soft’ side of CPFR, enabling the capture of best practices by the right people, and in self-formed groups. This is particularly useful during the up-front negotiation of the agreement and rules, and also in the management of exceptions. For example, when discrepancies appear in forecasts, a collaborative peer-to-peer workspace allows the appropriate individuals to efficiently discuss, analyze, and resolve the issue, and leave a multi-media trail of documentation for others to learn from the next time a similar problem arises.”

Growing awareness of CPFR benefits will continue to draw the horses to water, perhaps in a stampede if companies recognize that supply chain collaboration can drive margin improvements up to three percentage points. Getting the horses to drink is always a
challenge—due to significant management commitment and cultural changes required to initiate and sustain CPFR initiatives—but the endorsement of e-marketplaces and availability of new peer-to-peer workspaces will help companies overcome their natural reluctance to set aside old transactional ways of doing business. And if anyone doubts that their industry competitors are working hard to establish new collaborative strategic relationships up and down the value chain, just read through the variety of case studies presented on these pages.

For more information about collaborative practices, see the chart on this page. The best place to start is www.cpfr.org.