Collaborative Planning, Forecasting and
Replenishment (CPFR) |
| 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. |
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| 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. |
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| Benefits of CPFR |
| The following are some of the benefits of implementing CPFR |
| Retailer |
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Enhanced sales opportunities and recovery of lost sales |
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Commitment from supplier for maintained service levels |
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Investment in the right inventory |
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Long-term price rationalization due to mutual cost cutting |
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Ability to monitor product in supply chain |
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| Supplier |
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Enhanced sales opportunities |
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Commitment from buyer results in more assured order flow |
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Reduced overproduction and optimal inventory |
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More effective capacity/asset utilization |
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Ability to monitor actual consumer demand |
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| Consumer |
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Consumer satisfaction with right product at right time |
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Promotional items on hand |
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| Steps in CPFR Implementation |
| The following are the steps and processes involved in CPFR implementation |
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Front-end agreement – Planning |
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Joint business plan – Planning |
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Create sales forecast – Forecasting |
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Identify sales exceptions – Forecasting |
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Resolve sales exceptions – Forecasting |
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Create order forecast – Forecasting |
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Identify order exceptions – Forecasting |
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Resolve order exceptions – Forecasting |
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Generate order - Replenishment |
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