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Part - V

CPFR operates as a set of business processes in which trading partners agree to mutual business objectives and measures, develop joint sales and operational plans, and electronically collaborate to generate and update sales forecast and replenishment plan. The increased level of communication between partners means that when changes in demand, promotions, or policies occur jointly managed forecasts and plans can be adjusted immediately, minimizing or eliminating costly after -the- fact corrections for the both parties.

One of the main differences between CPFR and other collaborative arrangements is that under CPFR, both parties are informed of exceptions, which generate the collaborative activities aimed at resolving these exceptions. A second difference is the reliance on the exception engine to be able to point out discrepancies, when operating at scale - in other words with a large number of stores and many stock keeping units.

4. CPFR Process Steps

Step 1: Front-end agreement
Step 2: Joint business plan
Steps 3-5: Sales forecast collaboration
Steps 6-8: Order forecast collaboration
Step 9: Order generation/delivery execution

Step 1: Create Front-End Agreement
Participating companies identify executive sponsors, agree to confidentiality and dispute resolution processes, develop a scorecard to track key supply chain metrics relative to success criteria, and establish any financial incentives or penalties.

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