CSCMP's Supply Chain Quarterly
January 20, 2019
Chain Reactions

Chain Reactions

Comment

On the contrary, CPFR has scaled
The article "Why has CPFR failed to scale?" (Quarter 2, Page 60) has a somewhat familiar tone and tenor compared to several others that I have critiqued over the years. They have had in common an attention-grabbing headline followed by a review of the past, forecasts for the future of CPFR/collaboration, and a conclusion that CPFR is important, but with certain caveats. … [Editor's note: The acronym CPFR, which stands for collaborative planning, forecasting, and replenishment, has been trademarked by Voluntary Interindustry Commerce Solutions (VICS).]

CPFR is about collaboration, and effective collaboration has been identified by Logan and Stokes in their best-selling book Collaborate to Compete as the catalyst for change and a competitive advantage. VICS has had, and continues to have, success in bringing global visibility to CPFR. We have an extensive library of case studies that highlight the benefits that have been realized by a significant number of companies.

To the best of my knowledge, there has never been a negative CPFR article written by a member of VICS or anyone who has had direct experience with implementing CPFR. Typically, those who have written with a negative slant have not attended any VICS CPFR committee meetings, where numerous case studies were presented, including some about the sharing of information between trading partners. Perhaps they might have developed a different point of view if they had just gone to a CPFR meeting.

Let me reference a few such cases.

One example is "A CPFR Success Story," written for the March 2006 edition of Supply Chain Management Review by Larry Smith, senior vice president of planning and replenishment at West Marine, and co-chair of the VICS CPFR committee. Larry is truly a CPFR expert and a seasoned and highly successful executive.

We can also point to IBM's "Expanding the Innovation Horizon" Global CEO Study 2006, and Accenture's "Collaboration Survey" dated September 25, 2006. In addition, Professor Judy Whipple of Michigan State University has just written a paper on CPFR that is based on an indepth survey. Interestingly enough, none of these documents make the point that CPFR is not scaling because of a lack of POS (point of sale) information.

I'm quite familiar, by the way, with the work of André Martin that was referenced in the article. Fifteen years ago, he and I worked on the use of POS information to drive supply chain management, applying the principles of DRP (distribution resource planning) long before he wrote Flowcasting the Retail Supply Chain. We continue to work together on advancing the use of DRP at the point of sale to drive market success for the network of collaborators.

On reading "Why has CPFR failed to scale?" I found that it was "grocery-centric," provided old news, and offered little of value to advancing the practice of CPFR/collaboration. The author's recommendation to separate marketing from managing the supply chain is just unimaginable. In my opinion, marketers have as much, if not more, to do with effective and efficient supply chain management as are those who are directly responsible for that function. New products, promotions, advertising, etc., create demand, which, is managed through the supply chain.

We agree that sharing of market information is important, but we do not agree with the author's contention that CPFR has failed to scale. Scale does not mean conducting CPFR with 100 percent of companies' trading partners. Scale may mean collaborating with the 20 percent of trading partners that represent 80 percent of sales.

Finally … the VICS CPFR Certification program incorporates more than 10 years of experience by practitioners and provides a road map for successful CPFR implementations. While we do promote a demand-driven supply chain, it is but one approach to successfully building collaborative programs.

Joseph C. Andraski
President and CEO of VICS


Importers should tighten control of product quality
I applaud CSCMP's introduction of Supply Chain Quarterly and found many articles in the inaugural issue to be of considerable interest.

My concern is about two articles that specifically targeted topics associated with China: "China's future success may depend on supply chain talent" and "Export diversification will change China's relationships."

Neither of those articles drew attention to product quality and the importance this plays in the success of a supply chain. This has taken on even more importance in light of the recent news relative to the failure of product from China entering the commerce of the United States and the rest of the world. It is even more interesting that the subject of product quality hasn't appeared in most trade publications for a very long time.

Companies have worked hard for many years to bring the consuming public to the point that virtually nobody looks to see where a product was made. That is true of electronics, apparel, footwear, toys, and even food. Yet in the space of just a few months, the "country of origin" issue surfaced and drew widespread attention, reversing all of the work done for the past 20-plus years by major international brands, importers, and retailers.

It all started with tainted pet food, then moved on to toys decorated with lead paint, truck tires with separating treads, tainted toothpaste, and now farm-raised seafood. Just this week there was a recall of more than one million toy ovens in which children could easily burn their fingers. All of these products were produced in China.

People are starting to look again at where their goods are coming from, and that is not good news for anyone who manages part of the supply chain cycle. It is time for everyone involved to take a long, hard look at the quality of their products and, more importantly, to tell their customers what they have done and are doing to ensure that the goods they are providing are of the appropriate level of quality.

Major importers generally have controls in place to ensure product quality … they need to tighten these controls to a level that eliminates any possibility of tainted product. Importers should have on-site laboratories to test chemicals used in manufacturing as well as high-level testing of in-process and finished goods—before they leave the producers' facilities.

Smaller importers are open to greater problems. They don't, in most cases, have people on hand to perform inspections. They may have never visited the factory that is producing their product. They may have found them at a trade show, online, or through a trading company. As evidenced by the truck-tire problem, a product recall can put a company out of business while the management wonders why they didn't spend the "short money" to inspect the product that caused their demise, either by themselves or through a reputable inspection service.

It took a lot of effort over a long period of time to bring us to the point where U.S. consumers accept "globalization" of their goods. But it is taking a far shorter period to reverse all of these efforts, making it important that companies address both the quality of the product as well as let the consumer know what steps they have taken or will take to ensure that their products maintain this high standard.

Herb Rothstein
President, H. Rothstein & Associates Inc.

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