Executive Briefings

Implementing CPFR in Latin America

Grupo Herdez is one of Mexico's leading manufacturers and distributors of grocery products and is a pioneer there in Collaborative Planning, Forecasting and Replenishment. Eduardo Cantu explains some of the challenges to CPFR implementation in Latin America.

Implementing CPFR in Latin America

In addition to its own line of traditional Mexican grocery products, Grupo Herdez also distributes such global brands as Barillo pasta and Ocean Spray, to name just two. Since Collaborative Planning, Forecasting and Replenishment (CPFR) was introduced in Mexico nine years ago, Grupo Herdez has been a leader in encouraging its adoption.

Over the last four years these efforts have begun to pay off, with interest in CPFR surging, says Cantu, CPFR national manager at Grupo Herdez. “Companies are realizing that these practices bring results,” he says. By interacting more closely with retailers to find out what is selling, replenishment programs can be optimized, resulting in higher sales and lower stocks of slow moving items, he says.

This type of collaboration requires trust between retailers and suppliers, however, and in Mexico there is not a history of trust among business partners. “When there is no trust, you implement a lot of validation processes and that slows the flow of everything and makes it hard to obtain desired results,” he says.

That can only be overcome by working shoulder-to-shoulder, day-by-day to demonstrate that shared information will be used not to overstock your retailer but to optimize inventory levels, says Cantu. “That trust is only gained with time.”

Another challenge to CPFR implementation is the wide variance in technological capabilities among companies. “CPFR can only be applied to the largest retailers because they are the ones that have the technology and people and structure and processes to be able to collaborate.” This is becoming less of a problem as the cost of technology comes down, he says.

Moreover, CPFR in Latin American needs to encompass not only planning but execution, says Cantu. “Partners might be collaborating from the replenishment standpoint, but the product fails to arrive at the final destination. Retailers and suppliers need to interact at the DC level, which the CPFR model does not consider,” says Cantu. Grupo Herdez is working on this challenge. “We are looking at how to interact and share information at the DC level, such as the time that it takes to unload the truck. Target times for such activities are not always met and sharing information and understanding why will help improve service levels.”

To view the video in its entirety, click here

In addition to its own line of traditional Mexican grocery products, Grupo Herdez also distributes such global brands as Barillo pasta and Ocean Spray, to name just two. Since Collaborative Planning, Forecasting and Replenishment (CPFR) was introduced in Mexico nine years ago, Grupo Herdez has been a leader in encouraging its adoption.

Over the last four years these efforts have begun to pay off, with interest in CPFR surging, says Cantu, CPFR national manager at Grupo Herdez. “Companies are realizing that these practices bring results,” he says. By interacting more closely with retailers to find out what is selling, replenishment programs can be optimized, resulting in higher sales and lower stocks of slow moving items, he says.

This type of collaboration requires trust between retailers and suppliers, however, and in Mexico there is not a history of trust among business partners. “When there is no trust, you implement a lot of validation processes and that slows the flow of everything and makes it hard to obtain desired results,” he says.

That can only be overcome by working shoulder-to-shoulder, day-by-day to demonstrate that shared information will be used not to overstock your retailer but to optimize inventory levels, says Cantu. “That trust is only gained with time.”

Another challenge to CPFR implementation is the wide variance in technological capabilities among companies. “CPFR can only be applied to the largest retailers because they are the ones that have the technology and people and structure and processes to be able to collaborate.” This is becoming less of a problem as the cost of technology comes down, he says.

Moreover, CPFR in Latin American needs to encompass not only planning but execution, says Cantu. “Partners might be collaborating from the replenishment standpoint, but the product fails to arrive at the final destination. Retailers and suppliers need to interact at the DC level, which the CPFR model does not consider,” says Cantu. Grupo Herdez is working on this challenge. “We are looking at how to interact and share information at the DC level, such as the time that it takes to unload the truck. Target times for such activities are not always met and sharing information and understanding why will help improve service levels.”

To view the video in its entirety, click here

Implementing CPFR in Latin America