Collaborative Planning Forecasting & Replenishment (CPFR)

By, Allen Kannattu Nidhi DesaiRaghav Samdani Vishak R SharmaCollaborative Planning Forecasting & Replenishment (CPFR) CPFR - An IntroductionCollaborative Planning, Forecasting and Replenishment (CPFR) is a business model in which retailers and manufacturers extend collaboration from operational planning through to execution using Internet-enabled technology.DefinitionIt seeks cooperative management of inventory through joint visibility and replenishment of products throughout the supply chain

It is achieved by mutual sharing of POS, inventory, promotions, strategy and production information between retailers and suppliers

CPFR evolved from Efficient Consumer Response (ECR)Co-ordination of marketing, production and replenishment

In 1987, P&G and Wal-Mart pioneered in Continuous Replenishment Process (CRP) which is often called as Vendor Managed Inventory (VMI) which includedInformation SharingJoint Demand ForecastingCo-ordinated Shipments

In 1996, CPFR pilot between Wal-Mart and Warner Lambert.

Evolution of CPFRCollaborative PlanningDevelop Front End AgreementCreate the Joint Business Plan

Collaborative ForecastingCreate the Sales ForecastIdentify Exceptions for Sales ForecastResolve/Collaborate on Exception Items

Collaborative ReplenishmentCreate Order ForecastIdentify Exceptions for Order ForecastResolve/Collaborate on Exception ItemsOrder Generation

CPFR ProcessDemandEnhanced RelationshipGreater SalesCategory ManagementImproved Product Offering

SupplyImproved Order Forecast AccuracyInventory ReductionsImproved Technology ROIImproved Overall ROIIncreased Customer Satisfaction

CPFR Benefits: Demand & Supply

Exception ManagementActive monitoring of planningPerformance AssessmentDefining the scope of collaboration Assigning roles, responsibilities, checkpoints and escalation procedures.Sales ForecastingOrder Planning/Forecasting

Order GenerationOrder FulfilmentCPFR ModelElectronic Data InterchangeData SynchronizationData RegistrationCommon Data Standards

CPFR EnablersWal-Mart worked together with its key suppliers on a real-time basis by using the internet to jointly determine product-wise demand forecast

Example: Wal-MartThank You!