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Metro AG's CPFR Strategy Drives Solid Results

DUSSELDORF, Germany -- Metro Group here yesterday released numbers that demonstrated the success of its collaborative planning forecasting and replenishment (CPFR) strategy.

Metro's CPFR program, which is run on the GNX Supply Chain Collaboration platform, provides joint promotions management between Metro Cash & Carry in Germany and seven strategic suppliers in the detergent and paper goods categories. Joint workflow processes for promotion planning and promotional sales forecasting are key components of the program.

"Metro's CPFR program underwent several conceptual as well as technological changes," said Axel Hopp, Metro Group corporate information manager. "Connecting Metro's pilot environment with Metro Cash & Carry's operational replenishment systems in order to prove the concept with hard facts was a technological and organizational challenge in itself. The fact that Metro and its trading partners and our technology partner GNX had to undergo considerable effort to gauge these impressive results underlines our continuous belief in the superiority of the concept of supply chain collaboration."

Throughout the duration of the program -- which was launched in 2002 -- various metrics, including stock service level, promotion lift, and end of promotion coverage, were measured and tracked for approximately 500 SKUs in Metro's Cash & Carry stores.

A thorough analysis of historic sales, inventory, and forecast data from the Cash & Carry stores from 2002 through 2004 was used to benchmark the collaboration results. For purpose of analysis, not only were all key metrics of products within Metro's collaboration program monitored, but they were also compared with the performance of the remaining products in the paper goods and detergents categories.

The analysis showed dramatic improvements, according to the retailer. Within the test group (all CPFR Suppliers, Q4 2004 vs. Q2 2002), Metro realized a 26.8 percent improvement in promotion lift, and a 0.74 percent improvement in promotional stock service level (to 99.53 percent). This represents a further reduction of out-of-stocks by more than 61 percent. The retailer also reduced its end-of-promotion stocks 14.9 percent, from 22.9 days to 18.9.

Promotion coverage and stock service level were at comparable levels for products within and outside the program in 2002, but by the end of 2004, Metro measured improvements in the program product metrics over non-program products of the same category:

-- A 4.85 percent increase in stock service level (99.53 percent for CPFR items vs. 94.68 percent non-CPFR)
-- Almost 50 percent less end-of-promotion coverage (18.9 days CPFR vs. 37.3 days non-CPFR)
-- While the promotion lift of the products in the CPFR program could be further improved by 26.8 percent, no significant change could be measured in the control group of the non-program products (there was a slight decrease of 1.7 percent).
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