Supplier Deck CPFR Process and Benefits

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Supplier Deck CPFR Process and
Benefits
Collaborative Planning, Forecasting, and
Replenishment
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CPFR History

• Collaborative Planning, Forecasting, and
  Replenishment was developed in 2001 to focus on
  improving partnerships between Best Buy and key
  vendors through joint business planning and
  forecasting of consumer demand.
• In 2008, Best Buy had 50 of revenue up on some
  level of CPFR.
  

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Standard Retail CPFR Model
Standardized Retail CPFR Model
CPFR is a continual process designed to advance
the supplier relationship with Best Buy to an
enhanced collaborative level

• Establish the ground rules for the collaborative
  relationship (Front-End Arrangement and Joint
  Business Plan)
  
• Determine product mix and placement
• Develop event plans for the planning period

• Monitor exception conditions
• Calculate key metrics
• Share product and market insights
• Adjust plans and processes for continuously
  improved results
  

• Project consumer (point-of-sale) demand (Sales
  Forecast)
  
• Calculate order and shipment requirements over
  the planning horizon
  

• Place orders, prepare and deliver shipments
• Receive and stock products on retail shelves
• Record sales transactions and make payments

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Best Buy - 3 Levels of CPFR Collaboration
Vendor Considerations
Process Description

• Both partners work from one set of jointly owned
  numbers
  
• Vendor provides independent sales forecast and
  commit numbers
  
• Sales forecast collaboration process will
  consist of management by exception approach
  
• Collaborative phone call

• Mostly tier one vendors
• Shipping performance at or near best in class
• Dedicated CPFR resources
• Vendor has ability to create independent sales
  forecast
  
• Data sharing Vendor sales forecast and commits
  sent to tool. The vendor commits are fed into
  the ladder.

Full

• Good partner with opportunities for improvement
• Visibility will strengthen supply and demand
  needs
  
• Appropriate for VMI products
• Data sharing No vendor data is sent to the CPFR
  tool

• Vendor utilizes BBY data to enhance their demand
  planning process
  
• Vendor provides no data
• Vendor has visibility to allow for better
  planning
  
• No collaborative call

One Way Data Sharing

• The Express e-mails for each Best Buy business
  team will look and feel the same
  
• The data will have a uniform layout, similar to
  the ladder file currently sent
  
• Projections can be sent to multiple contacts
  within the suppliers company

• Total sales, base sales, promotional sales,
  receipt projections, and total available on-hand
  metrics are sent to suppliers automatically via
  e-mail
• Vendor does not log into the CPFR tool

Express
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CPFR Express Information

• What is CPFR Express?
• Currently, the Best Buy Demand Planning teams
  spend 4,100 hours annually sending sales and
  receipt projections to suppliers. With CPFR
  Express, projections will be sent to suppliers
  via e-mail automatically. In turn, teams will no
  longer be sending manual projections and can
  reallocate the time to forecasting and
  collaboratively planning the business.
• Projections can be sent to multiple contacts
  within the suppliers company based on class. (No
  more forwarding of e-mails.) E-mails can also be
  sent to the Demand Planning and Merchant Teams.
• What are the benefits?
• With CPFR Express, total sales, base sales,
  promotional sales, receipt projections, and total
  available on-hand will be sent weekly on a day
  chosen by the supplier/business team.
• The Express e-mail for each Best Buy business
  team will look and feel the same. The data will
  have a uniform layout, similar to the ladder file
  currently sent.
• Dummy SKU information will be included in this
  file. (i.e. Best Buy computer teams)
  
• What is the cost?
• The CPFR Express solution fee is 2,000 annually
  per supplier, regardless of the number of Best
  Buy classes.
  
• What are the next steps?
• For questions about utilizing CPFR Express,
  contact your CPFR Specialist.
  
• You can sign up for CPFR Express by filling out
  the information on the website below.
  
• https//www.agentrics.com/systemsdev/cp/si
  gnup/reg_step1.jsp
  

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CPFR Platform
Agentrics (Manugistics Tool)
Data
Data
Supplier
Best Buy
Tool to view Best Buy and Supplier POS Forecasts
and enable collaboration
In our desire to become a more efficient
enterprise, we utilize the CPFR platform on
Agentrics which is a third party. Using Agentrics
to facilitate CPFR affords the following
advantages

• Scalable and secure platform
• Low cost internet based solution
• Robust functionality tailored to our needs
• Integration with existing inventory
  replenishment programs
  
• 24 x 7 technical support

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CPFR Benefits
Collaborative Planning, Forecasting, and
Replenishment focuses on improving partnerships
between Best Buy and key vendors through joint
business planning and forecasting of consumer
demand.

• Qualitative Benefits
• Enhanced communication
• Greater trust
• Improved visibility
• Focus on same goals
• One version of the truth
• We win together and we lose together

• Quantitative Benefits
• 10-40 forecast accuracy improvement of consumer
  demand
  
• 2-10 Increased Sales via improved Customer
  Availability/Instocks (CA)
  
• 10-40 inventory reduction throughout supply
  chain
  
• .5-4 service level improvements and reduced
  transition costs
  

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Expectations of a CPFR Relationship (One-Way or
Full)

• Functional
• Resource to be dedicated to pulling CPFR reports,
  analyzing the data and incorporating it into
  their demand planning system
  
• Visibility and communication will lead to better
  planning
  
• More advanced notice on needs should lead to
  meeting consumer demand more accurately
  

• Technical
• Integrate data into backend systems or use data
  from Agentrics in making forecasting and
  allocation decisions
  
• If integration to backend systems is not
  possible, we expect that the data will be
  reviewed in the Agentrics system, or downloaded
  manually for analysis
• Best Buy expects to see benefits in forecast
  accuracy and customer availability (instock
  levels)
  
• If interested in CPFR full relationship, supplier
  is expected to interface commits and POS forecast
  data back to Agentrics

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CPFR Full Collaborative Call Agenda

• Agenda Items
• Review trends
• Collaborate on models with issues
• Collaborate on remaining exceptions
• Review ad changes
• Collaborate on transition planning milestones
• Review supplier marketing plans
• Review retail price changes
• Review industry highlights as needed

Reference during calls as needed
1) Exceptions to sales forecast
a. Current trend b. Seasonality c. K
ey learnings d. Last years sales 2) Promoti
ons a. Ad schedule sent weekly or as changes
occur b. Ad lifts (lower retail, new model, b
ack/front cover, reward zone) c. Ad product e
ffect on other products (cannibalization)
d. Strikezones e. Vendor promotions (rad
io, magazine, new model launches)
3) Retail changes a. Planned price drops
b. Planned rebates (instant, mail in or gift
card)
4) Transitions a. Discuss upcoming reset date
s b. Are new skus set up? c. Exit skus
Are any skus heavy or light based
on reset date? d. Sales cannibalizati
on that needs to be forecasted?
5) Holiday Planning a. How do this years sal
es compare to last years? b. Are ad lifts la
rger during this time period? c. Receipt smoo
thing? 6) Competitive Environment a. Assortm
ent changes within Best Buy b. Competitor pri
ce drops in category c. Other retailer event
d. Industry information
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Agentrics Fees for CPFR

• There are two fees associated with the CPFR full
  and one-way processes
  
• Initial set-up fee
• Annual maintenance fee
• There is a fee associated with the CPFR Express
  process
  
• Annual maintenance fee

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CPFR Resources

• CPFR Director
• Todd Schilling 612-291-5528 todd.schilling_at_best
  buy.com
  
• CPFR Planner
• Ryan Smith 612-291-6076 ryan.smith_at_bestbuy.com
  
• CPFR Specialists
• Stephanie Vigen 612-291-7926
  stephanie.vigen_at_bestbuy.com
  
• Megan Huskey 612-291-6833 megan.huskey_at_bestbuy.
  com
  

or send an e-mail to CPFR_at_bestbuy.com
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For More Information on CPFR

• www.CPFR.org
• This is run by the Voluntary Interindustry
  Commerce Standards Association an organization
  that has standardized the CPFR process in
  association with its many members.
• Read through the voluntary guidelines for a
  detailed view of CPFR.