Pharmavite to launch collaborative system with Kmart

Computerworld - Vitamin manufacturer Pharmavite Corp. said it wants to keep the supply chain between it and Kmart Corp. healthy by using a new application to improve inventory planning, customer service and forecasting.

	Making CPFR Work CPFR requires Web-based collaborative applications to be attached to supply-chain forecasting and demand software. Pharmavite uses software from Logility Inc. Kimberly Clark uses software from Syncra Systems Inc. Bell Sports uses Logility's and Syncra's software Other vendors include SAP AG, Manugistics Group Inc. and OMI International Inc.

A CPFR system lets trading partners and customers work together closely via Web connections to realize efficiencies in inventories and customer service—and save money as a result.

"The use of collaborative technologies is relatively new, even though the technologies have been around for five years or so," said Lora Cecere, an analyst at Stamford, Conn.-based consultancy Gartner Group Inc. A lack of standardization for the technology, as well as lack of trust between retailers and suppliers, has hampered its acceptance until now, she said.

But interest is growing. A report released by Newburyport, Mass.-based research firm Industry Directions Inc. last April—the most recent available—showed that 68% of 130 manufacturers, distributors and retailers were piloting, researching or preparing a CPFR-based rollout. In addition to Troy, Mich.-based Kmart, companies performing CPFR pilots include Canadian Tire Corp., Kimberly-Clark Corp. and the Transora.com grocery exchange.

The benefits of using a CPFR system are many. Gartner, in a study based on CPFR use at 20 companies doing business with Kmart and other retailers, estimated that CPFR can improve inventory accuracy by 5% to 15%, reduce the supply chain's operations cost by 20% to 35% and pay for itself in four to six months. Observers explained that turnaround and return on investment will depend on the relative state of the forecasting and supply-chain infrastructure.

Indeed, Pharmavite, which began its CPFR pilot in August and will go live with the system next month, has already identified incremental sales and inventory savings that will more than pay for the software, said Art Karrer, Pharmavite's CPFR project manager.

The initiative's cost is in the tens of thousands of dollars, but the company does several millions of dollars' worth of business with Kmart each year, he said.

"CPFR gives us the ability not only to manage inventory but [also to] understand retail sales movements," Karrer said. By using its collaboration tool to connect to Kmart's collaboration and forecasting systems once per week, Pharmavite will know what mix of products to send along and get better control of the flow of inventory, helping avoid chargeback fees for returned merchandise, Karrer explained.