JDA Software to set up an offshore team in India that
would analyze the store-level data during U.S. evening
hours. This meant that fresh insights would be available in time for the morning CPFR calls. The Indian
team parsed the sell-through and inventory-quantity
data by product model and store to identify actionable
trends for the CPFR team back in the States. For example, if the analysis showed that the sell-in order quantities for a retailer’s distribution center were not in line
with the associated store-level sell-through quantities,
then the Indian team would identify this mismatch.
That information would then be highlighted during
the CPFR call, giving the retailer’s
buyer or planner time to adjust
future order splits accordingly.
Another example: If sell-through
of a particular model-store combination showed an anomalous
drop, Sony would alert the retailer, which could then check
whether the model was correctly
displayed, priced, and available
for sale at that store.
Having this type of analysis
available in a timely fashion
quickly produced results. In-stock levels at stores increased by
up to 18 percent with the same
or lower aggregate channel
inventory levels. Forecast accuracy improved by up to
40 percent. The retailers, of course, were delighted.
During the review sessions held at the end of the
pilot program in late 2009, their demand planning
managers expressed excitement that Sony had been
able to focus the CPFR discussions and make useful
suggestions for improving store-level execution.
There was universal agreement to continue the program beyond the pilot phase, and the retailers asked
when and how the program could be extended to
include more categories, more recommendations,
and more information sharing.
Capping off this success story, Wal-Mart Stores Inc.
recognized Sony Electronics as its 2009 Supplier of the
Year. The award criteria included financial growth versus the prior year, market-share gains, ability to provide
new technology and innovative design, marketing collaborations, and support of Walmart’s online business.
As these criteria suggest, the award served to validate
the very point that had been used to initially justify the
S&OP program: that supply chain improvements and
better collaboration with retailers can provide competitive advantage and benefits to the bottom line.
THE FUTURE OF THE “TRUSTED CHAIN”
As Sony’s journey along the road to S&OP continues,
collaboration with its key retail partners has expanded.
In addition to the weekly CPFR calls with the customer’s buyer or demand planner, Sony Electronics
now also conducts quarterly reviews at the manag-er/director level and holds biannual executive-level
summits. This focus on collaboration is why Vice
What’s next for Sony’s trusted
chain? According to Yu, the next
level of S&OP sophistication is
“profitability-aware decision
making.” In other words, decisions about sales and operations
should support Sony’s overall
objective of maximizing gross
margin return on investment for retailers as well as
revenue and profitability for Sony.
Rather than merely discussing tactical, execution-oriented metrics (such as the number of units ordered,
shipped, and sold) the conversation will extend to such
topics as which assortments are most profitable and
strategic for the retailers based on customer demographics, or what pricing actions make the most sense
from a mix and margin perspective. In this way—
collaborating with retailers not just on order flow but also
on business plans, customer-segmentation strategies,
and long-term vision—Sony will ensure a continued
strong presence in the consumer electronics space for
the foreseeable future. ●
Note: For more about integrating S&OP and CPFR,
see the Voluntary Interindustry Commerce Solutions
(VICS) paper, “Linking CPFR and S&OP: A Roadmap
to Integrated Business Planning” ( www.vics.org/
committees/cpfr/cpfr_white_papers/).
