1.Estimate the cost savings to HI if obsoletes and out-of-stocks related to promotions could be eliminated. For obsoletes, the loss is holding and transportation cost + salvage lost. For out-of-stock, the loss is mainly opportunity cost. If HI eliminate both obsoletes and out-of-stocks, cost saving will be 450,000 + 8% x (8,975,000,000+9,410,000,000)/2 x (66%-44%) +0.2% x (602,000,000+630,000,000)/2 = 162,238,000 + 1232000 = 163.5 million Euros
2.Using Schwarz’ IDIB Portfolio perspective, CPFR might be viewed as an improvement in HI’s information and decision-making systems. Suggest alternatives to CPFR that might involve implementation and/or buffering. Improvement in implementation:
Selection of CPFR Partners
Trading partners who wish to collaborate with each other need to assess the potential relationship according to anticipated, realistic benefits, pertinent to common business goals, organizational and cultural issues. For a successful relationship, a ‘close fit’ on these aspects is preferred, or some indication that the potential exists to develop relationship with joint objectives and goals. Senior Management Buy In
Senior management must assume the role of CPFR sponsor for each of the trading partners to ensure that the necessary resources (Human Resources, Technical Infrastructure, Time and Project Budget) are prioritized and dedicated to the project. Trust Based Relationship
CPFR involves sharing sensitive information. To take full advantage of the benefits of CPFR, trading partners need to create a relationships founded on trust. Sharing sensitive data and close collaboration demands reliability. CPFR should not be seen as a tool to develop a good relationship; rather, it can help to enhance a good, existing trading partner relationship. Internal Reward Structure
The reward structure within each organization needs to be aligned with the objectives of the CPFR initiatives in order to ensure the...