Calculating Costs of Extending Real-Time Replenishment

Your sandwiches are fresh. Your data is not. Sure, your bakery-cafe chain has grown quickly, driven by the decidedly hip menu at your now 500 restaurants. Total revenue has leapfrogged to $800 million, and plans for 20 new restaurants should keep that number headed north.

But your supply chain keeps you up at night. Inventory carrying costs, inefficient shipping and spoilage are a drag on operating margins, and you cant bear to think about lost sales—assuming, of course, you had the technology to do so. Right now, communication between restaurants, distribution centers and the corporate ordering hub is a patchwork of phone calls and end-of-the-day data feeds. You need help.

The answer may be right under your nose. You were a young, cutting-edge company once, after all, and an early adopter of collaborative planning, forecasting and replenishment (CPFR). Like many companies, youve already invested in a high-level CPFR system that links you to suppliers. But also like many companies, you stopped there. Now its time to push those proven efficiencies down the line and give your restaurants, distributors and suppliers an up-to-date supply chain.

Youll need a consulting team to guide you through what you conservatively estimate will be a one-year implementation. The application will be Web-based modules for your existing collaboration suite. Youll need to upgrade the hardware and connectivity in some stores, and the consultants must help ensure smooth integration of everything from point-of-sales systems to corporate databases.

The results? A comprehensive CPFR system that will track demand in real time and streamline inventory, reducing costs in shipping, overhead, waste and lost sales. A 100% return on investment is typical in as few as six months, and just wait until you see your new operating margins. Better still, your supply chain will stay as fresh as your food. After all, its not their burger vs. your sandwich anymore.

Download the interactive Microsoft Excel file for this planner from the above .xls graphic link. Project owners should note that the prices shown are estimates; actual costs vary according to infrastructure, complexity, scale and corporate culture.