Collaborative Planning,

Forecasting and
Replenishment (CPFR)
and the Network —
Cracking the Bullwhip!

Prepared by
James E. deMin
BT Infonet

CPFR and The Network

Volume 3 w w w. b t . i n f o n e t . co m
 I ntr o d u c t i o n

This paper explores the network implications of an emerging business initiative in the
consumer goods industry referred to as Collaborative Planning, Forecasting, and
Replenishment (CPFR) where manufacturers, distributors, and retailers jointly work
together to plan, forecast, and replenish products. While reliance upon some form of
communications media is an obvious aspect of any CPFR initiative, all too often the net-
work infrastructure is not adequately considered and the effectiveness of the CPFR initia-
tive suffers. The ability to optimise the global wide area network communications infra-
structure can greatly contribute to the end-to-end performance of collaborative planning
between trading partners. This optimisation at the network-level can then generate
orders-of-magnitude improvements in the business performance metrics of CPFR, which
include; fill rates, supply chain cycle times, supply chain inventory levels, and share-
holder value.

Figure #1 - Collaborative Planning, Forecasting and Replenishment (CPFR)

2 CPFR and The Network

The genesis of CPFR can be traced to 1995/96 when
Wal-Mart and Warner-Lambert (now part of Pfizer), together
with SAP and Benchmarking Capital, initiated an experi-
ment to jointly forecast and plan the replenishment of
Listerine, a popular brand of mouthwash. The experiment
was limited to one Warner-Lambert plant and three
Wal-Mart distribution centres. As a result of CPFR, Warner-
Lambert’s service levels increased from 87% to 98%, while
the lead times to deliver the product decreased from 21 to
11 days. The partnership also increased Listerine sales
by $8.5 million over the test period. The success later
prompted the Voluntary Inter-industry Commerce Standards
(VICS) association, in cooperation with over thirty other
consumer goods companies from the drug, grocery, general
merchandise, and apparel industries, to set up guidelines
for synchronising business processes, forecasts, and
replenishments, now formalised as CPFR. The central
theme of the CPFR guidelines was and still is the alignment
of business processes and standardisation of technologies
to share forecast and other planning information securely,
simultaneously, globally and in real-time.
Therein lies the enormous dependency upon the network,
which is the infrastructure component that must be proper-
ly designed and supported in order to provide these
capabilities (i.e. securely, simultaneously, globally and
in real-time).
better visibility to each other’s plans through real-time
collaboration. Other studies by industry research groups
have suggested that inventory carrying costs for fast-mov-
ing items can vary from between 20% and 100% of its
value on an annualised basis.
The nature and scope of the collaboration between supply
chain partners have taken on many different forms, each
having its own distinct advantages and shortcomings. To
study the benefits of CPFR in realistic situations warrants a
view of the supply chain as a total environment or ecosys-
tem, encompassing all of its components (organisations,
functions, processes, technologies and activities). Doing
so is made all the more difficult as a result of the number
and complexity of the data-driven decisions to be made
within a collaborative supply chain, as well as the inter and
intra-organisational issues that must be addressed.
What management wants to see in the enterprise’s supply
chain is an equilibrium between customer demand and the
production planning. By achieving this goal, production
levels (i.e. supply) can be precisely matched to demand.

Over the last decade collaborative relationships between

trading partners in the supply chain have been recognised
as a recipe for operational and financial efficiency.
Evidence strongly suggests that there are significant
rewards to improving supply chain efficiency. For example,
a U.S. Department of Commerce report indicated that
Figure #2
there is more than $1 trillion in finished goods inventory in Equilibrium Between Customer Demand and Production Planning
U.S.-based stores, distribution centres and manufacturing
plants. Much of this inventory is "just in case" merchan-
dise that would be unnecessary if trading partners had

3 CPFR and The Network

However, managing supply chains in today’s competitive
world is increasingly challenging. The greater the
uncertainties in such factors as supply and demand,
globalisation of the market, shorter product and tech-
nology life cycles, and the increased use of outsourced
manufacturing, distribution and logistics partners, the
greater is the complexity of the supply chain. These and
numerous other factors unfortunately all too often result
in growing disequilibria between customer demand and
production planning.
Figure #3
Disequilibria Between Customer Demand and Production Planning
In its simplest form, CPFR seeks to permit the more precise
production planning of inventories and a matching of sup-
ply and demand. Success with CPFR is thereby achieved
when production planning has become demand-driven on
an end-to-end basis throughout the supply chain.
During the last two decades enterprise applications such
as those from SAP, i2, Manugistics, Oracle, and others have
begun to provide the automated support for the collabora-
tive business processes that seek to enable CPFR.
However, these technologies in and of themselves pose
some very vexing challenges for network managers who
seek to administer infrastructures that enable the neces-
sary levels of security, performance, scalability and globali-
4 CPFR and The Network
sation. As a result, the ability of organisations to glean the
benefits of CPFR is largely a function of their success with
properly designed networks that satisfy the requirements
for CPFR. This makes the selection of a global network
service provider of paramount importance to enterprises
undertaking such initiatives.
Supply Chain Management Fundamentals
The supply chain is far from being a low-hanging fruit and
represents an enormous exposure for virtually all organisa-
tions in the consumer goods and other inventory-intensive
industries. Also, supply chain risks come in many different
forms. First, the financial risks can be huge and failure
catastrophic for enterprises who fail in supply chain execu-
tion. Inventory costs due to obsolescence, mark-downs
and stock-outs can be very punishing, with almost immedi-
ate impacts to an organisation’s bottom-line performance.
Personal computers, for example, devalue by more than
one percent per week. Recent statistics from a survey of
major retailers showed that retail mark-downs constitute
approximately 20% of total retail sales volumes.
Mismanaged supply chains, leading to excessive or
mismatched inventory can thereby lead to huge financial
risks. Financial risks can also result from the risk of
reworking stock levels and penalties imposed for non-
delivery of goods. The complexity and uncertainty forces
of a supply chain can also drive what are referred to as
"chaos risks." These chaos effects result from overreac-
tions, unnecessary interventions, second-guessing,
mistrust, and distorted information throughout a supply
chain. The well-known bullwhip effect (addressed later in
this paper), which describes increasing fluctuations of
order patterns from downstream to upstream supply
chains, is an example of such chaos. This increased chaos
will invariably lead to higher costs and inefficiencies
through over-ordering.
Figure #4 - Chaos Dynamics of the Supply Chain
The existence of chaos in a supply chain also means that it
is impossible to make the right decisions for every player
within a supply chain. The risks of making the wrong or
ineffective decisions, or decision risks, become the
inevitable consequence. Thus, it will not be possible to
design optimal production schedules if there is uncertainty
as to when materials or components will be available.
Ultimately, the supply chain is exposed to market risks,
i.e., missing the market opportunities presented. A supply
chain cannot be responsive to changing market trends and
customer preferences if the right market signals cannot be
readily obtained and quickly interpreted. Similarly, a sup-
ply chain cannot successfully penetrate a new market seg-
ment if there is a marked inability to quickly change pro-
duction or available supplies to meet fluctuations in
demand. Finally, market opportunities can be missed
when customers and distributors inadvertently place
orders with impossibly short order lead times that cannot
be met by current production capacity.
5 CPFR and The Network
A supply chain with high-risk exposure cannot be efficient.
There will always be tangible risks in a supply chain, which
can lead to poor performance, but there are also intangible
elements such as the attitudes and perceptions of the
users and members of the supply chain. The intangible
lack of confidence in a supply chain leads to actions and
interventions by supply chain members, which collectively,
could further increase the risk exposure. A classic example
of this is the potential reaction from the customer and/or
distributor-facing end of a supply chain. For example, if a
sales team believes that order cycle and order fulfillment
times are not reliable, they will devise their own means of
addressing such perceived limitations. They may order
stock so as to have adequate supply levels to support their
existing customer demands and submit additional phan-
tom orders (i.e. creating their own private buffer stock) to
secure additional on-hand supply, which thereby causes
inefficiencies. Similarly, they may place orders in anticipa-
tion of potential future demand with the intention of later
cancelling such orders prior to scheduled shipment if
anticipated demand does not materialise. This risk spiral
exists everywhere, and the only way to break the spiral is
to find ways to increase confidence in the end-to-end sup-
ply chain. Therefore, the elements of the supply chain that
can reduce the lack of confidence — visibility, control and
chaos must be adequately understood and addressed.
>> Visibility — Confidence in a supply chain is weakened
when end-to-end order cycle time, i.e., the time it takes
from when an order is requested by a customer through to
delivery, is excessively long. The increased globalisation
of supply chains and the prevalent use of subcontract
manufacturing, distribution and logistics partners can con-
tribute to the length of time it takes to complete all the
needed steps in the order fulfillment process. Associated
with pipeline length is the lack of visibility within the sup-
ply pipeline. Hence, it is often the case that one member
Figure #5 — CPFR Shared Processes and Data
6 CPFR and The Network
of a supply chain has no detailed knowledge of what goes
on in other parts of the chain - finished goods inventory,
material inventory, work-in-process, actual demands and
forecasts, production plans, capacity, yields, and order
status. Visibility issues can be addressed by providing all
partners with access to real-time information systems such
as through extranets, trading exchanges, direct ERP-to-ERP
integrations, etc. However, to be effective such systems
must deliver reliable and predictable end-to-end perform-
ance, with security provisions that permit only authorised
users to access the information.
>> Control — In addition to visibility, supply chain confi-
dence requires the ability to take control of the supply
chain operations. Sadly, most supply chains do not have a
great deal of control once the order is released. Hence,
even if a supply chain manager has visibility of some por-
tion of the pipeline, he/she often cannot make changes
within short time periods to accommodate demand
fluctuations. For example, even if information is obtained
on demand changes or yield shortfalls, the supply chain
manager may be helpless: (a) since the suppliers may not
be flexible to respond to such changes, (b) there are
no expediting options available, or (c) the production line
is inflexible and production scheduling changes are not
feasible, etc.
Semiconductor manufacturers are often faced with this
problem of lack of control. The long lead times by factories
are such that, even if the manufacturer is made aware of
sudden market demand changes, it takes too long to
respond and the market opportunities are then missed.
The problems of control can be partially addressed by
initiatives that seek to provide real-time access to stan-
dardised internal and external master data related to raw
materials, components, finished goods, production plan-
ning, etc. Such initiatives often involve agreeing upon
standard data formats, XML transactions, etc., which lead
to very large transactions being passed over the global
network infrastructures. Hence, the network designs must
be able to accommodate such standards, as well as exhibit
the necessary security/access controls so that partners are
willing to freely exchange their data with other members of
the supply chain. Therefore, network firewalls, managed
extranets, encryption techniques, etc. all become crucial to
the success of addressing control issues.
>> Chaos — Without supply chain confidence, members
of the supply chain are vulnerable to chaos and decision
risks. Sales people may start over-ordering since they do
not have timely visibility of the correct demand signals, or
they know from experience that supplies may be late or
insufficient to fill the complete orders. Production plans
7 CPFR and The Network
are thereby based upon inflated production lead times due
to similar lack of visibility and control. "Safety lead times"
are commonly used in standard Manufacturing Resource
Planning (MRP) systems, since production planners do not
want to incur production delays. The lack of means to
expedite or be flexible in manufacturing also implies that
any yield shortfalls or production downtimes have to be
made up for by additional production, and as a result,
lead times are often stretched out in production plans.
The irony is that when planned production lead times
are inflated, actual lead times will gradually match the
planned target, a human behaviour known as Parkinson’s
Law, which prescribes that when a goal is too lax, then
the tendency is for workers to relax and actually "achieve"
the goal.
Once information can freely flow across the supply chain,
then an organisation is positioned to achieve reductions
in total system inventory while simultaneously improving
responsiveness to demand. The ability to match supply
more closely with demand is often referred to as agility
and the key to agility is speed. If flows through the
pipeline can be accelerated then it stands to reason that
volatile unpredictable demand can be met more precisely.
Even better, there are lower levels of inventory in the
pipeline because it is shorter — in effect information has
been substituted for inventory — a key concept in under-
standing supply chain management. Again, information is
substituted for inventory, which is the basis for enabling
significant efficiency improvements.
However today, agility requires synchronisation from
one end of the supply global pipeline to the other.
Synchronous supply requires transparency of demand and
pipeline inventory in as close to real-time as possible. It
also requires a willingness on the part of all the members
of the supply chain to work to a single supply chain plan.
A decade ago such an idea would have seemed fanciful.
However, two factors have significantly changed the land-
scape of supply chain management in the last few years.
The first of these is the availability of the technology and
software applications to enable the capture and sharing of
information across a supply chain — increasingly using
extranets. The second, is the increasing willingness of
members of the supply chain to put aside the traditional
arms-length relationships with each other and in its place
move towards closer, partnership-type arrangements.
Again, the networks over which these collaborations take
place must possess the necessary levels of performance,
scalability, security and reliability in order for these bene-
fits to be realised to their maximum potential.
CPFR Fundamentals
The key concepts behind CPFR can perhaps best be
explained by comparing it to the traditional Reorder Point
(ROP) approach. Under a ROP procedure, retail level
planners collect product information and marketing pro-
grams at the product distribution point level. Combining
this information with point-of-sale (POS) data, item-level
forecasts and event calendars that record promotional
dates, special marketing programs, etc., are thereby
generated. Based upon inventory and/or service level
targets, the forecasts (and all the corresponding errors)
are used to generate reorder points. When inventory of
an item reaches the specified reorder point, the
retailer/distributor places an order to the manufacturer.
If the product is available, it is shipped to the retailer/
distributor; if not, the retailer/distributor will seek alterna-
tive solutions to replenish the item. The manufacturer,
on the other hand, collects product knowledge and
marketing programs of major retailers from public sources.
Based upon retailer/distributor orders and historical
shipment information, the manufacturer generates a
forecast by item, and in most cases, by geographic region.
These forecasts also drive the production of the items,
8 CPFR and The Network
as well as the geographic regions where the items will be
produced and warehoused. However, such independent
planning between the members of the supply chain can
result in extended cycle times, poor customer service,
inefficient use of working capital, items being produced
and/or stocked in the wrong geographic regions, etc.
During the last decade CPFR emerged as a method to
counter some of the shortcomings of the ROP approach.
The objective behind a CPFR initiative is that the trading
partners work off a common forecast or plan. That is, the
retailer, distributor and the manufacturer collect market
intelligence on product information, store promotional
programs, etc., and share the information in real-time over
a global Wide Area Network (WAN). In most cases, the
retailer or distributor owns the sales forecast. If the
manufacturer agrees with the forecast, automatic
replenishments are made to the retailer/distributor via
predetermined business contracts so that a specified
level of inventory or customer service is maintained. If the
manufacturer and retailer cannot agree upon the forecasts
or if there are exceptions, such as an unusual seasonal
demand or a new store opening, the forecasts are recon-
ciled manually. Prior to implementing CPFR, the distributor
and the manufacturer agree upon several key factors, such
as how to measure service levels and stock-outs, how to
set inventory and service targets, etc. However, with CPFR
the distributor and manufacturer will jointly redesign key
business processes such as setting increased sales
objectives, or improving transaction mechanisms to reduce
costs of all parties.
If life were only that simple!
The "Bullwhip Effect"
The bullwhip effect was coined from an initiative
undertaken by logistics experts at Procter & Gamble (P&G)
who were examining the order patterns for one of their
best-selling products, Pampers. Its sales at retail stores
were fluctuating, but the variabilities were not particularly
excessive. However, these experts were surprised by the
increasing degree of variability in the distribution of
orders. When they looked at P&G's orders of materials to
their suppliers, such as 3M, they discovered that the
swings were even greater. At first glance, the variabilities
did not make any sense. While the consumers, in this
case, the babies, consumed diapers at a steady rate,
the demand order variabilities in the supply chain were
continually amplified as they moved up the supply chain.
Figure #6 — Bullwhip Effect
9 CPFR and The Network
P&G called this phenomenon the "bullwhip effect," and
the phenomenon holds true for virtually every organisation
whose product or service involves multi-level supplier
relationships, regardless of the industry. In some
industries, this also is known as the "whiplash" or the
"whipsaw" effect.
Distorted information from one end of a supply chain
to the other can lead to tremendous inefficiencies.
Companies seeking to effectively counteract the bullwhip
effect must start by thoroughly understanding its
underlying causes, which can be very complex.
When a supply chain is plagued with a bullwhip effect and
demand information is distorted, the following business
impacts can often result:
>> Excessive inventories
>> Poor product forecasts
>> Insufficient or excessive capabilities
>> Lost revenues
>> Misguided capacity plans
>> Inactive transportation and logistics
>> Missed production schedules
>> Poor customer service
>> Uncertainly and costly production
>> High costs for corrections (e.g. expedited shipments,
overtime, etc.)
Essential to minimising the bullwhip effect is to first under-
stand the forces, which drive customer demand planning
and inventory consumption, as they are the triggers for
replenishment order quantities at various points in the
supply chain. The most effective process for smoothing
out the oscillations of the bullwhip effect will typically be
distributors and suppliers understanding what drives
demand and supply patterns and then, collaboratively
working to improve information quality and compressing
cycle times throughout the entire supply chain process.
These opportunities for improvement will typically include
the following:
>> Minimise the cycle time in receiving projected and actual
demand information by interconnecting systems on a
24/7 basis, with the objective of near zero downtime and
latency of data updates.
>> Establish the monitoring of actual demand for product to
as near a real-time basis as possible.
10 CPFR and The Network
>> Understand product demand patterns at each stage of
the supply chain by similarly interconnecting logistics
providers, raw materials suppliers, secondary
suppliers, etc.
>> Increase the frequency and quality of collaboration
through shared demand information such as
establishing direct ERP-to-ERP collaboration between
supply chain partners.
>> Minimise or eliminate latencies, information queues
and batch capture/update processes that would
otherwise create information flow delays. This may be
greatly aided by the use of network monitoring and
application-level reporting tools, as well as network-
based probes, which can be used to identify such
delays on a continual and real-time basis.
>> Eliminate inventory replenishment methods that launch
"demand lumps" into the supply chain.
>> Eliminate incentives for customers and distributors
which directly cause demand accumulation and order
staging prior to submitting replenishment requests,
such as volume transportation discounts.
>> Minimise incentivised promotions that will cause
customers to delay orders and thereby interrupt
smoother ordering patterns.
>> Offer products at consistently good prices to
minimise buying surges brought on by temporary
promotional discounts.
>> Identify, and preferably, eliminate the cause of customer
order reductions or cancellations.
>> Provide vendor-managed inventory (VMI) services by
collaboratively planning inventory needs with the
customer to projected end-user demand levels then,
monitor actual demand to fine tune the actual VMI lev-
els. VMI can often increase sales and profits especially
in industries where buyers can go to alternative sources
if the primary provider is out-of-stock.
Even the most modern of supply chain management sys-
tems, with all the bells and whistles, cannot automatically
stop the "bullwhip effect." It’s a demand management
process problem with very broad implications because it
often encompasses policies, enterprise applications (ERP,
SCM and CRM), interfaces, networks, trading exchanges,
data format inconsistencies, timing differences, etc.
It is therefore a mission imperative to continually seek to
reduce any potential disruptions to the accurate and real-
time communications between supply chain partners. By
doing so, the variabilities resulting in the bullwhip effect
can be similarly reduced. However, the techniques for
minimising the bullwhip effect represent very daunting net-
work challenges that involve seeking near 100% system
availability, predictable performance, scalability and
access controls across a global environment between
numerous partners. As a result, even seemingly minor
improvements in network performance, availability and
reliability can yield orders-of-magnitude contribution to
business performance.
Item Synchronisation
No discussion of supply chain management and CPFR
would be complete without addressing the process of item
synchronisation, which is the exchange (at a point in time)
of basic business data used throughout the supply chain
process to create a common understanding between trad-
11 CPFR and The Network
ing partners. This includes product and price data and
trading partner location information.
To understand the importance of item synchronisation
consider the following statistics, based upon a study
performed by A.T. Kearney, a leading management
consulting firm:
>> Within the North American retail market, supply chain
inefficiencies result in annual lost sales of $40 billion,
or 3.5% of total sales.
>> 30% of items in retail catalogues have data errors, which
cost between $60 and $80 each and consume
25 minutes of manual cleansing.
>> 60% of invoices generated errors and 43% of invoices
resulted in deductions.
>> For new products it can take up to four weeks for
complete and accurate item data to reach the retailer
for entry into their procurement systems.
These data inconsistencies result in inaccurate purchase
orders, credit transactions, payments and an operational
cost to resolve and correct. As noted previously, a basic
requirement of CPFR is the reliance upon the data
exchanged between partners. Therefore, before activities
such as ordering and delivery can accurately occur, data
must be exchanged and synchronised to ensure alignment
between the partners.
Effective item synchronisation is based upon the electronic
exchange of data and the continuous maintenance of data
attribute values between two or more different systems to
ensure item information alignment. The end result is that
the data attribute values are the same within all of the
systems, both seller and buyer, and the processing of
business documents can thereby be performed without
content exceptions.
The methods of accomplishing item synchronisation
include the following:
>> Peer-to-Peer — The seller transmits item and price
information directly to the buyer. This may be performed
in a variety of ways, both electronic and manual: EDI
(electronic data interchange), CD-ROM, spreadsheets, etc.
>> Data Pool — The seller and buyer agree to share a
common database of product/price information. This
is accomplished through the use of third party catalogue
services. The seller sends data to the third party and the
buyer pulls data from various sellers from the same
third party.
>> Trading Exchange — A number of exchanges, or
e-marketplaces, have emerged in the last several years.
As members of the exchange, the seller can send product
and price data to the exchange and the buyer can pull data
from the exchange.
>> Service Bureaus such as UCCnet — UCCnet is a owned
subsidiary of the Uniform Code Council (UCC) that provides
global item registry and data synchronisation services for
subscribing organisations.
Item synronisation is almost always based upon the use of
agreed-to or mandated data exchange standards such as
EDIINT AS2 (Electronic Data Interchange Over the Internet
Applicability Statement 2). These transactions can often
create challenges to the global WAN over which they are
exchanged as a result of their sizes and other unique
characteristics.
12 CPFR and The Network
Again, the global WAN plays a crucial role in an organisa-
tion’s ability to successfully accommodate the require-
ments of item synchronisation.
EDIINT/AS2
EDIINT/AS2 has become the standard data communica-
tions protocol for conducting and managing supply chain
transactions between partners.
EDIINT is a working group of the Internet Engineering
Task Force (IETF). Formed in February 1996, EDIINT was
chartered by the IETF to create a set of secure protocols for
sending EDI data over the Internet. The two EDIINT
standards that have been certified are AS1 and AS2.
>> AS1 provides Secure/Multipurpose Internet Mail
Extensions (S/MIME) encryption and security over
Simple Mail Transfer Protocol (SMTP). S/MIME secures
data with authentication, message integrity, non-
repudiation, and privacy features and is the primary
means of transporting most Internet email. SMTP is the
protocol used by most email systems for sending email
messages between servers.
>> AS2 provides a solution for securely exchanging EDI
using MIME and the Hypertext Transmission Protocol
(HTTP) instead of SMTP as the transport protocol. AS2
specifies the means to connect, deliver, validate, and
reply to (receipt) data in a secure and reliable way.
AS2 does not concern itself with the content of the EDI
document, only the transport. AS2 essentially creates a
wrapper around EDI flat files and provides security and
encryption around the HTTP packets.
Figure #7 — Ediint AS2 Transaction Flows

While EDIINT/AS2 is a sound, proven and increasingly
popular method for exchanging information across a
supply chain, it does create network challenges associated
with ensuring adequate security, performance and network
bandwidth sizing. For example, an EDIINT message
contains numerous headers, which increase transaction
sizes. Such factors must be considered when designing a
network that will satisfy required levels of performance
and scalability.

13 CPFR and The Network

Typical EDIINT/AS2 headers include the following:

Header Element Contents

From Sender
To Recipient
Disposition-Notification-To Party to receive receipts
Message-ID Unique identifier
Subject Text describing contents
Disposition-Notification-Options Delivery options for MDN’s
Receipt-delivery-option Delivery options for General Reciepts
Receipt-report-type Type of receipt to return
Receipt-security-selection Type of crypto to apply to receipt
Input-format Token to describe data type of payload
Agent Indication of 3rd party involvement
Application Object method to invoke at receiver’s server
Date Time Payload creation date/time
RefNum Unique message reference number
UserParam Catch all headers provided by sender, repeated by
receiver in receipt/response messages. Primarily used
for state/content.
GISB-Version Protocol version
Transaction-set Identification of transaction type identifier
Input-data Name associated with the payload
Receipt-disposition-to Party to receive General Reciept
Date Message creation date
Transaction-ID Unique identifier contained in receipt. Combined with
Reference Number. Uniquely identifies a package.
Time-c Date/Time of record acknowledging receipt by receiver
Priority Message Priority
Expiration Delivery Expiration

Exchanging data via EDIINT/AS2 is a step in the direction of
easing the pain associated with managing multiple streams
of information between partners in a global supply chain.
However, the network challenges are much more complex
than merely connecting to the Internet.
Network Implications
The overriding objective of supply chain management and
CPFR are to provide a high velocity flow of high quality and
relevant information that will enable suppliers to provide an
uninterrupted and precisely timed flow of materials to dis-
tributors and customers. These goals are dependent upon
a robust global communications infrastructure. Also,
enterprise-class applications used to support CPFR, such as
those from SAP, i2, Manugistics, Oracle and others, have
become the cornerstone of most multinational corpora-
tion’s (MNCs) supply chain management strategies.
Adopting such a software suite can provide numerous
advantages for an enterprise seeking to automate its
inventory and production planning processes. However,
these applications in and of themselves represent numer-
ous network challenges as a result of such factors as their
transactional characteristics, the geometric increase in
transactional growth resulting from A2A transactions (i.e.
transactions created by one application interacting with
another), etc. For example, a single order transaction
initiated by a user of a CRM application can be multiple

14 CPFR and The Network

megabytes in size and can require greater than 1,000
turns (round-trips between servers) to transmit the
necessary data between servers interconnecting
members of an integrated supply chain.
The challenges of accommodating such transactional char-
acteristics over a global WAN cannot be underestimated.
Also, there may be literally millions of such transactions
processed throughout the course of the average month,
with each having requirements for real-time performance,
access controls, 24/7 availability, etc.
Hence, enterprises seeking to undertake CPFR initiatives
must be prepared to address the communications chal-
lenges of integrating the processes, industry-specific data
Figure #8 - Transactional Characteristics of Interfaced Enterprise Applications
15 CPFR and The Network
exchange formats, software applications and partners
within the supply chain.
BT Infonet’s Application-Defined Networking (ADN)
approach addresses the challenges of business processes
and enterprise applications by designing networks that are
optimised for clients’ specific business objectives,
processes and applications. By utilising this approach
clients benefit by having fully managed global network
infrastructures that are "right-sized" to the unique charac-
teristics of the enterprise and the applications in use.
As a result, optimisation of process effectiveness is
achieved by a communications infrastructure that is
responsive, scalable and secure.
In summary, there is no single risk-free formula
for effectively implementing CPFR initiatives
within an enterprise. Such initiatives require the
reshaping of relationships between trading part-
ners, establishment of collaborative business
process environments and the implementation
of software technologies that are exceedingly
complex and inherently risky. The global WAN
implications of these initiatives are crucial to
Figure #9 - Application Defined Networking (ADN)
16 CPFR and The Network
their ultimate success. BT Infonet’s ADN
approach and expertise with the optimisation of
processes and enterprise-class applications can
greatly benefit organisations undertaking such
initiatives. Networks designed using BT Infonet’s
ADN methodology represent the best value to
multinationals seeking to derive ROI from their
technology investments.
About BT Infonet BT Infonet Worldwide
Sales Headquarters
Infonet Services Corporation, a member of the BT Group plc group of
Asia-Pacific
companies, known for its quality of service, is a leading provider of 8 Temasek Boulevard
#36-01 Suntec Tower Three
managed network communications services for multinational entities. Singapore 038988
Tel: +65 6820 3518
Fax: +65 6820 3520

Employing a unique consultative approach, BT Infonet offers integrated Europe, Middle East and Africa
350/358 Avenue Louise
solutions optimising the complex relationship between enterprise Box 3
B-1050 Brussels, Belgium
applications and the global network. Extensive project management
Tel: +32 2 627 39 11
capabilities are the foundation for the services and solution offerings Fax: +32 2 640 97 41

(broadband, Internet, intranet, multimedia, videoconferencing, wire- Latin America

Mardoqueo Fernandez 128
less/remote access, local provisioning, application and consulting serv- Piso 7
Providencia, Santiago, Chile
ices) positioning BT Infonet as a single-source partner for multinational Tel: +56 2 368 9400
Fax: +56 2 368 9415
entities. In particular, BT Infonet IP VPN solutions offer multinationals a
North America
unique combination of Private and Public IP services as well as a full One Parkview Plaza
Suite 610
set of Managed Security and Mobility Services.
Oakbrook Terrace, Illinois
60181 USA
Tel: +1 630 573 9000
Rated “Best in Class” overall in Telemark’s survey of Global Managed Fax: +1 630 573 1003

Data Network Services, Infonet Services Corporation has also won “Best BT Infonet Corporate
Headquarters
Customer Care” and “Best Carrier” at the World Communication 2160 East Grand Avenue
El Segundo, California
Awards. Founded in 1970, Infonet Services Corporation owns and oper- 90245-5024 USA
Tel: +1 310 335 4700
ates The World Network®, accessible from more than 180 countries, and Fax: +1 310 335 4507
provides local service support in over 70 countries and territories.
BT Group plc Corporate
Headquarters
81 Newgate Street
Additional information about Infonet Services Corporation is available London, United Kingdom
EC1A 7AJ
at www.bt.infonet.com. Tel: +44 121 433 4404
Fax: +44 1903 833371

An ISO 9001 Registered Firm

BT Group plc is a public limited company registered in England and
Wales under registration number 4190816 with listings on the London
and New York stock exchanges. Additional information about the com-
pany is available at www.bt.com/aboutbt.

Infonet, DialXpress, Global Connect, Global Workplace, PerspeXion and The World Network are registered trademarks of Infonet Services Corporation. DialXpressway, FirstWatch,
17 GRXpress, Insight Matters, MobileXpress and SiteWise are trademarks of Infonet Services Corporation. BT Infonet is a trademark of British Telecommunications plc. Other prod-
uct names that may be used herein are for identification purposes only and may be trademarks of their respective companies. Copyright © 2005, Infonet Services Corporation.
All rights reserved. 06/05 MP-WP018-02-BT.