Introduction
Supply chain collaboration based upon the Collaborative Planning, Forecasting and Replenishment (CPFR®) guidelines has become a “must have” business process for retailers and manufacturers. As companies conclude their pilot projects and pursue broader rollout of a collaboration solution, a major question arises: how to deploy in a way that gains the most benefit from CPFR?

The Internet introduces many options for working online with trading partners. Many companies already connect to partners’ extranets (such as Wal-Mart’s Retail Link) to review sales, inventory, promotions, supply chain performance data and CPFR exceptions. Others may join a business-to-business (B2B) exchange such as the WorldWide Retail Exchange (WWRE) or Transora.com that will provide catalog-based procurement, auctions, and CPFR to a consortium of retailers or suppliers. Finally, some companies choose to build their own supply chain collaboration extranets and provide online access to their partners.

In this dynamic environment of Internet trading relationships, what is the right ap-proach to CPFR: Be a spoke on a partner’s hub? Join an exchange? Build a hub? For many companies, the best answer may be all three. While the Internet may ultimately streamline and simplify supply chain relationships, the evolutionary process will add some complexity along the way. Companies must adopt a strategy and exploit technologies that allow them to be competitive on all fronts, without creating a “CIO’s nightmare.”

Spoke
Most companies get started working with trading partners over the Internet by sub-scribing to a large partner’s extranet. The best known is Wal-Mart’s Retail Link, but many other companies have developed programs of their own. For example, Tesco in the U.K. has the T.I.E. system, and Kmart offers its Merchant’s Workbench. These ex-tranets typically provide online access through a web browser to reports of supply chain activity, as well as key performance measures. Data includes sales, orders, re-ceipts, and inventory. Measures can include category sales rank, gross margin, fill rate, inventory turns and other key factors. Some systems provide very detailed reports – down to individual items in a store by day – along with summaries by category, geography, and period.

More recently, some extranets have expanded to include supply chain collaboration capabilities. Kmart has implemented Syncra Systems’ Syncra Ct‘ product to share and compare forecasts with suppliers and collaborate on exceptions. Wal-Mart offers some CPFR capabilities to selected suppliers through extensions to Retail Link.

For companies who choose to be a spoke on their trading partner’s extranet hub to perform CPFR processes, there are two sets of benefits:

1. The first is the speed and ease of getting access.
2. The second is the richness of the information that is available. Trading partners only need a PC and Internet access to take advantage of the extranet. Typically they do not need to purchase, install and configure any software, or translate data from some machine-readable format to review it.

The problems with using partners’ extranets are also twofold:

1. Users only get to see the data one partner at a time. Assembling the “big picture” of a company’s supply chain performance and customer demand from multiple trading partner extranet reports is next to impossible.
2. Making sense of data that is represented in terms of a partner’s geographies, channels and product categories is difficult. A retailer typically shows its data by department, while a manufacturer needs data by brand. Retailer departmental data may not map well to a manufacturer’s brands. Differences in multiple partners’ views further complicate the problem.

In sum, being a spoke on a trading partner extranet hub is an excellent way to ex-periment, but a difficult way to move supply chain collaboration into production. Relationships can only be managed one-on-one, and data is difficult to translate to local company needs. The approach is most appropriate if a company is small, or limited in IT capabilities, and does most of its business with a single large customer or supplier.

Exchange
The emergence of B2B trading exchanges is having a tremendous impact on electronic commerce. Originally the province of startup companies like Chemdex (now Ventro), VerticalNet, and e-Chemicals, the biggest exchanges are now being formed by consortia that include many large, established companies. The WorldWide Retail Exchange (WWRE), a consortium of 23 major retailers led by Kmart, Walgreens, Target, Tesco, and Auchan, represents over $450 billion in sales. Transora.com, affiliated with the Grocery Manufacturers Association (GMA), represents almost fifty manufacturing companies. Both the WWRE and Transora.com have announced their intent to offer CPFR capabilities to participating trading partners. In July 2000, WWRE selected Syncra Systems as its CPFR solution. As of this writing, Transora.com is in the process of selecting technology vendors.

A B2B exchange solves many of the problems associated with relying on trading partner extranets. Demand from several trading partners can be integrated and represented in each company’s own category, geography, and channel views. The exchange handles IT implementation issues, so local company IT investment is minimal. Each partner simply supplies core supply chain data to the exchange; beyond that, all access is by users through their web browsers.

In spite of all the benefits, there are three limitations of using a B2B exchange to implement supply chain collaboration:
1. An exchange may represent a large number of trading partners, but it is unlikely to represent all of a company’s trading partners. Strategic partners may be missing. For example, Wal-Mart is not currently a member of the WWRE. Unless Wal-Mart joins, WWRE will not be able to provide an integrated view of Wal-Mart’s demand with that of its retail membership to a supplier.
2. An exchange provides only a standard offering – some manufacturers and retailers may wish to collaborate with a different workflow process or data conventions.
3. There are technical limits to the amount of data that a B2B exchange can host. If a large retailer wishes to provide supply chain collaboration at a store level on a daily basis, it is currently not feasible to replicate the required data to a B2B exchange.

Hub
Building and managing a trading partner extranet can be a major undertaking. How-ever, for medium-to-large companies who need to gain the maximum competitive advantage from supply chain collaboration processes, it is probably a necessity. Only on its own hub can a company aggregate the demand from its entire network, includ-ing strategic partners, exchanges, and internal relationships (for vertically integrated companies).

Application service providers (ASPs) can shoulder much of the burden by hosting a CPFR hub on a company’s behalf. Products like the Syncra Systems SyncUp hosting service serve as a private B2B exchange. Partners supply their data, and then users access the service over the web.

For retailers who wish to drive collaboration down to the detailed level – daily, store-level data, and 52-week or longer forecasts that are updated frequently – im-plementing CPFR directly on their own enterprise data warehouse is the only practi-cal solution, at least today. For one company alone, well over a terabyte of data could be required in a fully deployed system. No one has implemented CPFR to this level of detail yet, but at least one retailer has already revealed plans to do so.

All Ways
In the end, most medium-to-large companies will need to incorporate all three de-ployment models for supply chain collaboration. They will connect to partner extra-nets to extract core supply chain data, participate in B2B exchanges to gain access to a community of trading partners, and build a hub that integrates all of this information for the benefit of company users. Even companies that provide rich corporate extranets will want to post summary data on a B2B exchange, so their demand can be included in the network marketplace.

Syncra Systems products support all these scenarios to reduce the complexity of de-ployment and increase the ROI of supply chain collaboration.

Syncra Xt‘ is a CPFR solution for B2B exchanges. It allows a community of buyers and sellers to collaborate on forecasts and results, aggregating demand across each partner’s own category, geography and channel views. Each company can administrate its own users, hierarchies, and trading relationships. Companies can invite one another to collaborate on new products or locations.

Syncra Ct is a CPFR solution that an individual retailer or manufacturer can use to collaborate with its own trading partner network. A company can deploy Syn-cra Ct itself, behind its firewall, or it can choose to have a third-party ASP (such as the SyncUp hosting service) host it for them.

Syncra Ct communicates with Syncra Xt and other Syncra Ct servers to incorporate demand from B2B exchanges and trading partner extranets. Syncra Ct and Syncra Xt both support Internet standards to integrate with third-party CPFR solutions. The user’s experience of Syncra Ct and Syncra Xt is the same whether they are on an ex-change or a trading partner hub. The difference is the range of companies that are visible.

Summary
Supply chain collaboration using the VICS CPFR guidelines is a vital business-to-business practice. Connecting as a spoke to trading partner extranets is an excellent way to start, but a company that wants to remain competitive will soon need to join an exchange, host its own CPFR extranet, or both. If a single B2B exchange represents the bulk of the demand for a manufacturer’s products, or a retailer can reach its sig-nificant suppliers there, it is probably the best alternative. However, if demand is split among multiple B2B exchanges and independent trading partners, a private hub can bring a company’s view of a whole market together. Table 1 compares the advantages and disadvantages of each approach.