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Part - VIII
5. Value of CPFR
There have been many reports on the benefits of CPFR. The CPFR documents available on the VICS Committee site indicates 30-40% improvements in forecast accuracy, significant increases in customer service, sales increase between 15% and 60%, and reductions in days of supply of 15-20%.
According to AMR Research (2001) reported on the range of results actually achieved by many early adopters of CPFR is summarized below in tabular form: -
| Retailer Benefits |
Typical Improvement |
| Better Store Shelf Stock Rates |
2% - 8% |
| Lower Inventory Levels |
10% - 40% |
| Higher Sales |
5% - 20% |
| Lower Logistics Costs |
3% - 4% |
| Manufacturing Benefits |
Typical Improvement |
| Lower Inventory Levels |
10% - 40% |
| Faster Replenishment Cycles |
12% - 30% |
| Higher Sales |
2% - 10% |
| Better Customer Service |
5% - 10% |
5.1 CPFR Benefits for Demand
Enhanced Relationship
Implicitly, CPFR strengthens an existing relationship and substantially accelerates the growth of a new one.
Buyer and seller work hand-in-hand from inception through fruition on business plan, base, and promotional forecasts.
Continual CPFR meetings strengthen this relationship.
Greater Sales
The close collaboration needed for CPFR implementation drives the planning for an improved business plan between buyer and seller.
The strategic business advantage directly translates to increased category sales.
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* Contributed by -
Deepak Bisht & Nilesh Dewangan,
Students of PGDIE,
NITIE, Mumbai.
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