CPFR is a methodology in which partners in value chain coordinate plans in order to reduce the variance between supply and demand and share the benefits of a more efficient and effective supply chain.
It operates as a set of business processes in which trading partners agree to mutual business and measures, develop joint sales and operational plans, and electronically collaborate to generate and update sales forecasts and replenishment plans.
Benefits of CPFR
The following are some of the benefits of implementing CPFR
Retailer
Enhanced sales opportunities and recovery of lost sales
Commitment from supplier for maintained service levels
Investment in the right inventory
Long-term price rationalization due to mutual cost cutting
Ability to monitor product in supply chain
Supplier
Enhanced sales opportunities
Commitment from buyer results in more assured order flow
Reduced overproduction and optimal inventory
More effective capacity/asset utilization
Ability to monitor actual consumer demand
Consumer
Consumer satisfaction with right product at right time
Promotional items on hand
Steps in CPFR Implementation
The following are the steps and processes involved in CPFR implementation
Front-end agreement – Planning
Joint business plan – Planning
Create sales forecast – Forecasting
Identify sales exceptions – Forecasting
Resolve sales exceptions – Forecasting
Create order forecast – Forecasting
Identify order exceptions – Forecasting
Resolve order exceptions – Forecasting
Generate order - Replenishment
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