Example: Retail replenishment

[Bob Haugen <linkage@interaccess.com>]

One of the differences between automotive and retail purchasing
is that retail businesses are usually replenishing products that
were purchased.  There are exceptions, of course:  products
that will be discontinued, new products, and seasonal and
sales promotion patterns where usage can be expected to
increase or decrease.  But the usual pattern is to keep
stock on hand for regular purchases, and replenish the
stock periodically as it is sold.

Retail practices are not nearly as codified as automotive,
but some practices are converging in groups like
VICS (Voluntary Interindustry Commerce Standards)
and its CPFR (Collaborative Planning, Forecasting and
Replenishment) committee.
http://www.vics.org/
http://www.cpfr.org/ 

The following practices come from CPFR.
Note (at end) the similarities between retail and automotive.

CPFR explains that retail supply chains use a variety of
practices.  They differentiate between the practices 
they classify as the "Current Process State" and
those they recommend as the "Future Process State".

__Current Process State:__

* AFR (Aggregate Forecasting and Replenishment):
1. Forecasts are developed on a product family or brand level,
by week or month, and by market region. Retailers may
do the forecasting, which may (or may not) be shared with the
manufacturers.  If not, the manufacturers do their own
forecasts.
2. Manufacturers send to distribution centers what they
believe is appropriate to make and stock.
3. Purchase orders are placed by retailers to stock
retail shelves.
4. Orders are fulfilled based on distribution stock,
which may be insufficient.

* VMI (Vendor-Managed Inventory
VMI can be driven from retail (where the vendor manages
the stock on the retail shelves) or distribution centers.
1. There is usually an upfront contract that defines
responsibilities and inventory targets.
2. The vendor does the forecasts.
3. The vendor generates some kind of replenishment
orders.  They may be based on warehouse withdrawals
or retail point-of-sale events, or on manual counts of
shelf stock by a route salesperson who may transmit
the info from a handheld computer.
4. Replenishment usually comes from manufacturer's
inventory.  
5. Promotion information may be transmitted to
manufacturers to produce for expected sales
increases.

*JMI (Jointly-Managed Inventory)
1. Almost always starts with upfront contracts
detailing responsibilities and rules.
2. Forecasts are done jointly, usually in more detail
than aggregates.
Everything else a lot like VMI, except that the parties
collaborate.

__Future Process State___
http://www.cpfr.org/ProcessModel.html 
There are several variations depending on the capabilities
of the participants.
Stages:
Planning
    1. Develop front-end agreement
    2. Create joint business plan
    3. Create sales forecast (in detail)
    4. Identify exceptions for sales forecast
    5. Resolve sales exception items
    6. Create order forecast
    7. Identify exceptions for order forecast
    8. Resolve order exception items
    9. Order generation
   10. Delivery execution

EDI messages used:
X12 830 Planning Schedule with Release Capability
      852 Product Activity Data
      850 or 875 Purchase Order

Note that the sequence of messages and their relationships
are very similar to automotive, except that CPFR uses
purchase orders to authorize shipments, whereas
automotive uses delivery schedules.