The movement gained momentum in 1998 when the Voluntary Interindustry Commerce Standards (VICS) got involved. VICS, formed by retailers, textile suppliers, and apparel makers, was established in 1986 to develop bar-code and EDI standards for the retail industry. VICS is a voluntary, nonprofit organization which takes a global leadership role in the ongoing improvement of the flow of product and information (about the product) throughout the entire supply chain in the general merchandise retail industry.

With VICS’ involvement, more companies were willing to participate in testing and
validating CPFR. A number of pilots were launched and successful. One of the most talked about involved stores in the Wegmans grocery chain and a Nabisco distribution
center. The two companies shared data on 22 items. Manugistics furnished the
application and hosted the server where the data was stored.

The Nabisco sales force developed a forecast for the items, which was then compared with Wegmans’ own forecast for its stores. Whenever any variance occurred, the Manugistics software sent an email to both parties. The pilot was successful: Nabisco’s sales of 22 Planters nut products grew by 31%, while Wegmans’ dollar sales of nuts increased by 16%, with a surprising 18% decrease in inventory.

CPFR Business Opportunities Abound
Who can best use CPFR? Companies that experience variation in demand, or buy or sell a product on a periodic basis; especially those that deal in highly differentiated products, branded products, and those that are not driven off price. In other words, most industries and companies, as evidenced by our earlier coal example. And there are many areas for collaboration, as shown in the diagram below.

Herein lies A LOT of opportunity. But where do we stand, and how far have companies progressed? In the winter of 2000, Syncra Systems and Industry Directions conducted a survey of manufacturers, retailers, distributors, logistics providers, and others to determine how many companies were deploying CPFR practices. For those who were engaged in CPFR, the study measured their techniques. The study found that there were multiple supply chain initiatives under way in 79 percent of the respondent companies—vendor-managed inventory being the most widely implemented.

ECR was the second most widely used initiative, closely followed by CPFR. Given how new CPFR is, this is indeed impressive, at least at face value.However, firms actively involved with or considering collaborative programs have a long way to go to achieve true collaboration: less than half of these companies share any data beyond promotional plans, and only 25 percent share POS data. The evolution to CPFR is still in its early stages.