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Part - IV

3. Collaborative Planning, Forecasting and Replenishment (CPFR)

All the initiatives mentioned in the last section are aimed at coupling supply chain more tightly by allowing for better forecasting and planning through information sharing, leading to synchronized channels. In other words, if suppliers have better visibility into the retailers' sales forecast they can plan their operation better and if they have better visibility into the retailers' order forecast they can plan their replenishment better. While some of these initiatives were adopted more widely than others, clearly they all contributed to the recognition, by leading retail and manufacturing participants, of the need for cooperative information exchange. Many of the expected benefits of these ideas failed to materialize since trading partners could not work with enough partners for the collaboration to "scale," and thus none of these initiatives developed a critical mass of participants. Consequently no partner could experience better forecasting of either sales or orders on a scale that would impact the bottom line. A significant part of the problem had to do with the EDI technology, which was the cornerstone of all the collaboration initiatives mentioned above.

CPFR is an idea whose time has come- helping extended supply chains become more demand-driven. Today it is also business practice that has begun to deliver significant business benefits to enterprises in the supply chains that have adopted it.

CPFR is a revolutionary business process wherein trading partners use technology and a standard set of business processes for Internet-based collaboration on forecasts and plans for replenishing product. CPFR is defined as those collaborative business practices that enabled trading partners to have visibility into one another's critical demand, order forecasts and promotional forecasts through a systematic process of shared brand and category plans, exception identification and resolution. The objective of CPFR is to improve efficiencies across the extended supply chain, reducing inventories, improving service levels and increasing sales. CPFR helps trading partners generate the most accurate forecasts possible and set highly effective replenishment plans. Practitioners report major benefits in higher service levels, decreased inventories, and increased sales.

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* Contributed by -
Deepak Bisht & Nilesh Dewangan,
Students of PGDIE,
NITIE, Mumbai.