The team even created and disseminated a standard
operating procedure for the call to ensure that the
process, roles, and rules of engagement were crystal-clear. Now, the right people were always in the room to
hear the information firsthand and to make decisions
appropriately—there was no waiting for news to filter
back to headquarters.
This initial step formalized the CPFR partnership
and gave added focus to Sony’s discussions with its
retailers. Where previously some categories focused
primarily on “sell-in” quantities (the units sold by
Sony to the retailer), now the emphasis shifted to “
sell-through” quantities (the units sold by the retailer, a
better measure of end-customer demand) and channel
inventory as measured by weeks of supply based on
the sales forecast. These rules of engagement set clear
expectations that both Sony and its customers would
meet their respective commitments.
ONE PLAN, ONE NUMBER
With collaboration firmly established, the foundation
for true sales and operations planning was in place.
The next step was to extend the CPFR discussions to a
deeper level of analysis and partnership. Accordingly,
Sony asked its retailer partners to communicate sell-in
and sell-through forecasts for a longer planning horizon; in return, Sony shared future product and promotional plans more openly.
In addition, the information exchanged during the
CPFR call could now be fed into a new, common
information platform. Stakeholders across multiple
functional areas were now able to view and update the
latest sales and forecast information. This consolidated planning platform allowed Sony and its partners to
create a consensus demand plan, which in turn could
feed the consolidated business-unit forecast—
ultimately enabling SEL to generate the “one number”
plan required for S&OP. SEL then shared this plan
each week with the factory suppliers, who used it to
develop production and shipment schedules.
Now that Sony had a consolidated business forecast
that incorporated the latest customer demand and
retail sales trends, the product groups could use it to
make more strategic decisions about supply planning
and allocation of products to sales channels. For
example, if a particular series of television sets was
selling well in the club store channel but not as well in
the regional stores channel, the product group could
request that the factory manufacture more of the club-
specific models.
RETAILERS BENEFIT FROM DATA ANALYSIS
Sony Electronics next approached its key retail partners with a low-risk offer: Would they be willing, on a
trial basis, to expand the CPFR agenda to include a
store-level data analysis in addition to the aggregate
sell-through quantity information they were already
providing? The new level of detail would include feedback on such concerns as whether inventory at the
retailer’s distribution center was aligned to store-level
demand and whether certain stores were consistently
over- or underperforming compared to average sell-through levels. The proposed pilot program, which
encompassed the television product category, would
have a fixed duration of four to six weeks; after that the
retailer could opt out if it saw no benefit to having the
additional information, or it could continue.
