May 2, 2005, 12:00 AM

It`s in the cards

(Page 3 of 3)

The tiered system also provides incentives for more suppliers to move up to CPFR status. For example, METRO lets suppliers participating in CPFR access data reports through METROLink to analyze historical sales, arming them with information to better prepare and contribute information that could be helpful for future promotions, Hopp says. "The purpose of the tiered system is to build up a hierarchy of collaboration," he says. "We need CPFR partners to reach a critical mass for our supply chain."

Future choices

As METRO rolls out its multi-tiered collaboration for its other retail divisions, however, it won`t necessarily deploy the full extent of collaboration for all products, Hopp says. Collaboration is most important for new item introductions for which METRO and its suppliers don`t already have information on sales history and for complex promotions with multiple products. "Collaboration is not a virtue in itself, it must deliver improvements in the way products get to stores and provide a cost benefit," he says. "If it only provides a 2% improvement in a promotion forecast, it may not be enough of a benefit."

Still, METRO expects to keep adding value to its overall collaboration process. A major avenue for added value will come through RFID, which will bring collaboration to a higher level of detail. In addition to sharing information with suppliers on sales and promotions, RFID will let METRO share information on the status and location of shipments, including whether and how fast a case of products sells out, Hopp says. RFID, or radio frequency identification, uses a system of radio frequency tags and readers to track on the web the status of shipments throughout the supply chain, including within stores.

Such information can be invaluable to suppliers, says Tom Ryan, a specialist in RFID systems and principal of TKR Consulting in West Chicago, Ill. "A supplier can confirm that a case isn`t missing and learn how quickly it sold through," he says.

That can only help suppliers better contribute projections for future promotions, Hopp says. "It`s a natural outgrowth of collaboration," he says. "RFID will let us provide even more detailed data than today on METROLink." Providing higher levels of detail, he surmises, will produce even more incentive for suppliers to show their cards.

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