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Leery Industry on Brink of Breakthrough

CHICAGO — Federated Department Stores is developing collaborative planning, forecasting and replenishment, or CPFR, with Liz Claiborne that could become a model for the industry. <br><br>"We need a big breakthrough — a program that makes a...

CHICAGO — Federated Department Stores is developing collaborative planning, forecasting and replenishment, or CPFR, with Liz Claiborne that could become a model for the industry.

This story first appeared in the July 22, 2002 issue of WWD.  Subscribe Today.

“We need a big breakthrough — a program that makes a strong case for adapting the movement,” said Tom Cole, chairman of Federated Logistics and Systems, at a panel discussion on “executing for supply-chain excellence and profitability” at the Retail Systems Conference and Exposition at McCormick Place in Chicago last month.

As far as the industry embracing CPFR: “We’re not doing as well as we could,” he said, adding that many merchandising executives are leery because of the technological demands and competitive concerns. “We’re still at arm’s length with many vendors.”

Like Quick Response, CPFR emphasizes the need for what Cole termed “a glass pipeline” so that vendors and retailers can streamline and automate forecasting and replenishment programs. The main difference is that CPFR gives the Internet — almost unknown a decade ago — a key role in the process. Cole later described the program with Claiborne as a CPFR test involving a few divisions of Claiborne. “It’s a small program at the beginning of the cycle, but we have a tremendous belief that we can work better together.”

On another technology front, Wal-Mart is testing auto-identification technology [basically the same as radio frequency ID, the next generation of the bar code.] at a Sam’s Club in Tulsa, Okla., while Target will begin a program involving frozen food and auto-technology this summer, according to Paul Singer, senior vice president and chief information officer of Target Corp.

Singer believes bar codes — the ubiquitous merchandise tracking system used by most large vendors and retailers — might be history within a decade. He said they’ll be replaced by auto-ID technology, a system being developed at MIT and other universities. The system employs computer microchips embedded in products and devices to scan and read the information contained on the chips. Singer’s remarks came during another conference seminar entitled, “Extend Scanning Beyond the Line of Sight.”

Auto-ID technology will enable unprecedented automation at all levels of the supply chain, said Singer. An example, he said is smart store fixtures that track everything from shrinkage to how long items have been on shelves. Key to processing enormous amounts of information in a timely manner, he added, will be a new generation of computers making decisions without human input.