CPRF

CPRF

Introduction

Collaborative Planning, Forecasting, and Replenishment (CPFR®) is a business model that takes a holistic approach to supply chain management and information exchange among trading partners. It uses common metrics, standard language, and firm agreements to improve supply chain efficiencies for all participants.

The driving premise of CPFR is that all supply chain participants develop a synchronized forecast. Every participant in a CPFR process — supplier, manufacturer, distributor, retailer — can view and amend forecast data to optimize the process from end to end. Essentially, CPFR puts an end to guesswork in forecasting. It means that manufacturers and retailers share their plans, with detailed knowledge of each others' assumptions and constraints. The CPFR initiative is driven by a committee of the Voluntary Inter industry Commerce Standards (VICS) Association comprising leading retailers, manufacturers, and solution providers.

The committee's stated mission, declared on the CPFR.org Web site, is: “to create collaborative relationships between buyers and sellers through co-managed processes and shared information (Cederlund, 2007). By integrating demand and supply side processes, CPFR will improve efficiencies, increase sales, reduce fixed assets and working capital, and reduce inventory for the entire supply chain while satisfying consumer needs.” From a manufacturer's perspective, adoption of a CPFR model may represent a dramatic and disconcerting shift away from well-established business practices for working with customers in retail sectors.

Discussion

What is CPFR?

Collaborative Planning, Forecasting, and Replenishment is a nine-step approach to improving supply chain management, and ties demand planning and supply planning into one process. For any change in the demand cycle — whether a truck breaks down or a seasonal holiday commences — inventory is redistributed and adjusted throughout the entire supply network. Participants can continuously verify the accuracy of each others' demand forecasts and handle exceptions in real time using the same datasets.

CPFR also uses performance feedback loops, such as “how did I do on my forecasts?” to continually improve the system's efficiency. The CPFR holistic approach to improving collaboration is the next natural step in the battle to cut non value-adding costs in the supply chain. Excess supply chain inventory is an expense that is paid for(directly or indirectly) by manufacturers and retailers.

Lost sales because of “stock-outs” or the wrong stock on hand is revenue lost by both sides. The costs of antiquated manual processes, custom integrations of different partner IT systems, and searching for information in multiple sources add up to overhead that cuts into the profit margins ...