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e-Slm Unit Unit-05-Collaborative Planning and Replenishment in Supply Chains Structure 5.1 Introduction Objectives 5.2 Meaning of Collaborative Planning, Forecasting and Replenishment Origin of CPFR CPRF Model 5.3 Collaborative Planning Collaborative Assortment Planning for Apparel and Footwear 5.4 Forecasting and Replenishment Dynamic Replenishment 5.5 Customer Information Quality Specification Customer Service and CPFR 5.6 Summary 5.7 Terminal Questions 5.8 Answers 5.9 Case Study 5.10 Glossary 5.1 Introduction By now you must be aware how planning and designing the Supply Chain involves comprehensive analysis of the requirements with reference to business, supply, demand factors, scale of operations, location, and available facility options. In today's fast-paced changing global economies, the key to survival for any enterprise is the high quality of its product(s) and service(s). Enterprise has to focus on continuous achievement of higher standards of customer satisfaction. This can be achieved by; understanding and predicting customer needs to provide it at the least possible cost, in the least possible time, and ahead of competition. This creates the need for a pragmatic approach to streamline the system and the need to differentiate an organisation committed to the above characteristics. In order to stay ahead of competition and be better prepared for change, organisations need to incorporate Collaborative Planning, Forecasting, and Replenishment (CPFR) both internally and externally. Based on information shared among trading partners, collaborations occur on sales forecast, order forecasts, seasonality of products, pricing models, proposed promotional strategies, safety stock rules, minimum order quantities, store realignments, and order
Forecasting and Replenishment Collaborative Planning. Explain origin of CPFR. This calls for a very strong commitment and a high level of trust from both the supplier and the retailer. Traditionally. The emergence of business as a global activity unfettered by the constraints of geographical and political boundaries has necessitated a re-adjustment of attitudes with reference to the manner of doing business. inventory stocks. and transportation across all trading partners. This is done by collaboratively forecasting and continuously replenishing inventory with the customers by offering process. and planned production schedule. results in reduced inventory carrying costs. suppliers and retailers did their individual forecasts and eventually ended up blaming one another for any shortcomings from their respective forecasts. out of stock data. Forecasting. we integrate the company goals throughout the supply and demand process. 5. . CPFR seeks co-operative management of inventory through joint visibility and replenishment of products throughout the Supply Chain. "CPFR tools work as metal detectors to identify business issues that need immediate attention". and thereby ensures product availability across the Supply Chain. Assessing CPFR Model.strategy. CPFR demands that the supplier and retailer collaborate by sharing information such as the Point of Sale data. and technology solutions. 5. CPFR aims to improve Supply Chain integration by supporting and assisting joint practices. Learning Objectives After studying this unit. logistics. Assess Customer Service and Replenishment. CPFR is an Internet based data-sharing business process that avoids data-entry errors. making the end-to-end Supply Chain process more efficient. you will be able to: Define the meaning of CPFR. reduced operating expenses.2. Efficiency is created through the reduction of expenditures for merchandising. inventory. and Replenishment (CPFR) is a menu-driven business process by which. collaboration. Elucidate Benefits and Scope of CPFR. According to Katz and Hannah. This allows for continuous updating of inventory and upcoming requirements. Information shared between suppliers and retailers assists in planning and satisfying customer demands through a supportive system of shared information. proposed promotion and pricing strategies. Successful CPFR implementation leads to business growth for all trading partners.2 Meaning of Collaborative Planning. It also demands to subsequently evolve a shared and agreed upon forecast.1 Origin of CPFR CPFR began as a 1995 initiative co-led by Wal-Mart's Vice President of Supply Chain.
VICS continues to lead much of the research and implementation of CPFR through its procedure and project investigations. New Internet software may make forecasting a snap. Based on the suggestion of Procter and Gamble's Vice President of Supply Chain. The latter two are makers of accounting and Supply Chain Management software respectively. CPFR has the potential to deliver increased sales. and services.2 CPFR Model The CPFR process model represents voluntary procedures aimed at structuring and guiding Supply Chain partners in setting up their relationship and processes. Warner Lambert (now part of Pfizer) served as the first pilot for CFAR. the standard was renamed CPFR to emphasise the role of planning in the collaborative process. About 20 companies are implementing CFAR. The first publication of the VICS and CPFR Voluntary Guidelines came out in 1998. a manufacturer fills the seller role. Penney. i2. Benchmarking Partners then gave CFAR to the Board of Directors of the Voluntary Inter-industry Commerce Standards Committee (VICS). the consumer followed by the middle ring of the retailer. The CPFR model presents the aspects in which industries focus. and the Cambridge. The centre of the model is represented as. The VICS Association in co-operation with leading retailers. The committee is continuing to improve the existing guidelines. goods. administrative and operational efficiency. The original committee was co-chaired by the Vice President of Customer Marketing from Nabisco and the Vice President of Supply Chain from Wal-Mart. and improved Return on Assets (ROA) performance.2. and the consumer is the end customer.C. SAP. 1996 Business Week article entitled Clearing the Cobwebs from the Stockroom. and Manugistics. Collaborative Planning. Vice President of Application Development. Forecasting and Replenishment (CPFR) represents a concept breaking business model that extents Vendor Managed Inventory principles by taking a holistic approach to Supply Chain Management among a network of trading partners. This session was for executives from Wal-Mart's suppliers as well as other retailers and the Uniform Code Council. Each ring of the . consumer packaged goods manufacturers as well as consulting software providers has developed the CPFR process model. IBM. The model provides a basic framework for the flow of information. and finally the outside ring being the manufacturer. Benchmarking has posted specifications on the web and briefed more than 250 companies including Sears. 1996. To promote CFAR as a pattern. Massachusetts software and strategy firm Benchmarking Partners. They integrate demand and supply planning and execution. 5. Currently there are committees to improve business guidelines and roadmaps for various collaborative scenarios. for Collaborative Forecasting and Replenishment). In the retail industry the retailer typically fills the buyer role.Chief Information Officer. J. According to an October 21. VICS established an industry committee to organise for rolling CFAR out as an international standard. The pilot's results were publicly announced at a CFAR industry session at Harvard University on July 30. These committees gained experience from pilot studies that have occurred over the past six years. improved cash flow. This includes upstream suppliers. tools and critical first steps that enable the implementation of CPFR. Benchmarking developed CFAR with financial support from Wal-Mart. and Gillette. suppliers of finished goods and retailers. organisational streamlining and alignment. The Open Source initiative was initially called CFAR (pronounced See-Far.
uncover trends or develop alternative strategies). . high inventories. and other factors. However. and low returns on asset. bundle sizing. the more distorted is the order stream relative to consumer demand as described by the so-called Bullwhip effect. checkpoints. The manufacturer supplies the retailer stores with product as per the demand. Each member of the Supply Chain observes the demand patterns of its customers and in turn produces as set of demands on its suppliers. Collaboration Arrangement is the process of setting the business goals for the relationship. Nevertheless. store openings/closings. It also consists the process of producing. Most companies forecast upcoming demand based on historical customer orders or shipment levels and patterns. the decisions made in forecasting. the one that offers the highest Radar Intercept Officer (ROI) for the particular trading relationship. and planning the next promotion. setting inventory targets. shipping. which determines future product ordering and delivery requirements based upon the sales forecast. The further a company is "upstream" in the Supply Chain. The new model makes the consumer focus visually apparent. inventory positions. and escalation procedures. Forecasting and Replenishment (CPFR) is a visionary framework for aligning supply and demand across a network of trading partners. and product introductions. Some of the key characters of any CPFR model are: The consumer is at the centre of the model: The goal of collaboration has always been to satisfy consumers with better product availability at lower cost. However. being the consumer. However. The Joint Business Plan then identifies the important events that affect supply and demand in the planning period such as promotions. transit lead times. Strategy and Planning. The consumer drives demand for goods and services while. actual consumer demand may be very different from the order stream.e. The product is pulled through the Supply Chain by the end user. responsibilities. This distortion of the demand picture imposes high Supply Chain costs in the form of suboptimal customer service levels. numbered sequence of steps. and stocking products for consumer purchase. The new CPFR eliminates the presumption that there is a start and finish (or any predetermined order) to this process. Analysis tasks include Exception Management (the lively monitoring of planning and operations for out-of-bounds conditions) and Performance Assessment (the calculation of key metrics to evaluate the achievement of business goals. the retailer is the provider of goods and services. and Order Planning/Forecasting.model represents unlike functions within the CPFR model. everyone in a customer/supplier relationship recognises that companies are always simultaneously selling products. many companies have found it difficult to implement the full scope of the CPFR model. Most successful projects have focused on just one part of CPFR at a time i. delivering. shipping the next order. defining the scope of collaboration and passing on roles. Collaboration is a continuous cycle of activities: The old model showed CPFR as a linear. Execution consists of Order Generation that forecasts to firm demand and Order Fulfilment. Demand and Supply Management is broken into Sales Forecasting that projects consumer demand at the point of sale. and purchasing take steps to transform and distort the demand picture. inventory policy changes. Collaborative Planning.
The Internet and subsequent growth of e-commerce over the last couple of years have revolutionised our daily life personally and business wise. Manufacturers and retailers in highly promoted channels concentrate their efforts on coordinating events to synchronise supply and demand where the volatility (and opportunity for out of stocks or overstocks) is highest. By giving business partner visibility into inventory and by collaborating a single shared forecast of customer demand. CPFR is the most comprehensive and extensive model of Supply Chain Management. Manufacturers. and execution which were a footnote. have adapted their demand planning processes to support Collaborative Forecasting. 3. It integrates the entire process rather than targeting specific areas. Create joint business plan: The parties involved create a business plan that takes into account their individual corporate strategies and defined category roles. it has become highly integrated with the 'quality consciousness movement' starting with quality control in 1960s. quality assurance in 1970s. This forecast is then . causal information. retailers. It also ensures a higher achievement of customer satisfaction by bridging the gap between the supply and demand processes throughout the organisation. are evolving to Collaborative Replenishment (CR) initiatives. and information on planned events. CPFR scenarios convert the high-level boxes and pictures of the generic CPFR model into systematic instructions for each of these CPFR variants. This reduces the cycle time and increases customer satisfaction. who have access to high quality Point of Sale (POS) forecasts. Over the years. The new model rebalances the CPFR tasks to encompass execution and place more emphasis on collecting and sharing the performance metrics that measure the success of the initiative. and total quality management during the 1990s. Product Chain Partnership. Create sales forecast: One party to create an initial sales forecast uses retailer Point of Sales data. It gave comparatively lesser support to no guidance on execution and analysis activities. and suppliers who have relied on continuous replenishment program (CRP) processes in the past. quality systems in 1980s. objectives. The impact of Supply Chain Management is found in such processes as Just In Time (JIT). Steps in implementing CPFR There are nine steps in CPRF implementation. The Internet has refurbished the existing business practises and it continues to evolve the new ones. They are: 1. Supply Chain partners can positively affect a set of key business drivers to create value across Supply Chain partners. Develop front-end agreement: The parties involved establish the procedures and rules for the collaborative relationship. and tactics. The nine step process ended with order commitment. 2. Necessity of CPFR The whole concept of 'Supply Chain Management' has undergone a recent metamorphosis. and benchmarking.Execution and analysis are fundamental to success: The original CPFR model supported demand planning and forecasting in detail. order fulfilment. Manufacturers and retailers in Every Day Low Price (EDLP) channels.
1 Roles and responsibilities of various management levels in implementing CPFR model . 7. Identify exceptions for order forecast: Products that fall outside the order forecast constraints. set the front-end agreement are identified. 5. Resolve/Collaborate on exception items: The parties discuss and produce an adjusted forecast. Create order forecast: Causal information and inventory strategies are combined to generate a specific order forecast that supports the shared sales forecasts and joint business plan. Following Table shows the roles and responsibilities of various management levels in implementing CPFR model. Table 1. set jointly by the parties involved are identified. 9. 4. 6. Resolve/Collaborate on exception items: The parties negotiate again (if necessary) to produce an adjusted order forecast.communicated to the other party and it is used as a baseline for the creation of an order forecast. 8. Order generation: One of the parties involved will get a firm order from the order forecast. Identify exceptions for sales forecast: Products that fall outside the sales forecast constraints.
highly visible sponsorship. Near elimination of Out of Stock situations. In order to create and implement a successful CPFR process.Benefits of CPFR implementation: Some of the benefits of CPFR implementation are: Increased level of trust due to sharing of critical information among trading partners and visibility to planned and unplanned changes. Sara Lee Corp. Klaris... Food Lion. Make to Demand manufacturing. the management team must be ready to commit both personnel and resources".. enabling better production management. sustained. Enhancement of the organisation's Economic Value Added (EVA). Distinct increase in service levels to customers. to name a few. Successful CPFR pilots have been carried out by companies like Wal-Mart. Warner-Lambert Co. Circuit City Stores Inc.1 illustrates the basis activities that lead to a complete CPFR process. . Enhanced category management benefits. Shift from Make to Stock discipline to. Hewlett-Packard.. Nabisco Inc. Figure 5. Schnuck Markets. Salisbury. Double-digit increase in sales. Lucent Technologies Inc. Improved Return on Assets (ROA) performance. More accurate demand and sales forecasting.. returns and allowances. Reductions in inventory on hand. Wegmans Food Markets. Kimberly-Clark Corp.. Kmart Corp. According to Katz. and Scorpio The success of a CPFR initiative depends on strong. Meijer.
This represents a very small percentage of the entire business community. system integrators. which aims to co-ordinate planning tasks of independent Supply Chain partners while. the scope of CPFR opportunities is unlimited. market-area specific planning to customer specific planning. Subsequently. The second edition is completely reworked. At its core. it provides a systematic description of a negotiation-based. companies can begin to eliminate uncertainty from the Supply Chain. production plans. the trading partner relationship is shifting from a 'win/lose' adversarial interaction to a 'win/win' collaborative interaction. a supplier. With the emergence of 'Trading Exchanges' across industries. _______________ aims to enhance Supply Chain integration by supporting and assisting joint practices. retailers. Implications of collaborative planning on supply contracts are outlined out. this basic concept is extended to cover Supply Chains with multiple partners and planning on a rolling basis. According to Harrington. and services. and a single customer. Self Assessment Questions 1. and of the scope of CPFR. The corporate and value-chain focus is shifting from market-area specific planning to _________________________ 5. every business has at least one supplier and one retailer and therefore.3 Collaborative Planning Collaborative Planning is an approach to Supply Chain planning. 2. incentives for co-operative behaviour by the supply-chain partners are analysed by applying concepts of game theory. practice-oriented approach to collaborative planning. shows how it is embedded in the broader subject matter of Supply Chain Management and reviews findings of related literature. In addition. The impact of Supply Chain Management is found in such processes as ______________ product-chain-partnership. It introduces collaborative planning. 3. inventory management. The CPFR model provides a basic framework for the ______________ goods. By collaborating collectively in real time on such things as sales forecasts. . Every industry.1: Illustration of a Successful CPFR Implementation Scope of future work on CPFR At present. and benchmarking. 4. In addition. the relationships and transactions between trading partners. The corporate and value-chain focus is shifting from. and procurement. The first publication of the VICS CPFR ____________________came out in 1998.Figure 5. buyers and sellers are coming together more than ever before. This is observed at the medium-term level of master planning between two supply-chain partners. updated and has become even more accessible. respecting their local authority decisions. 5. True collaboration requires a strategic change in the nature of both. and software solution providers actively participate in the VICS CPFR Committee. over sixty leading manufacturers.
the number is even higher. This leads to missed sales. Instead. Spanish retailers sell 50% of their goods on promotion. The CPFR solution itself does not have to be deployed by each trading partner. The goal of CPFR is to change the relationship paradigm and create significantly more accurate information that can drive the value chain to greater sales and profits. Collaborative Assortment Planning for Apparel and Footwear. It has noted increased promotional service levels. Yet projects till dates have been limited in scale because there has not been a viable process and data standard for sharing information about them. is to outline best practices that effectively address these challenges and advanced assortment planning collaboration and execution. CPFR is the division of forecasts and related business information among business partners in the Supply Chain. This lack of integration and synchronisation creates inefficiencies in the supply and demand chains. it can be stated that CPFR is still in its embryonic stage. promotional product sales volumes dwarf those during nonpromotional periods. CPFR takes quick response from Vendor Managed Inventory (VMI) and Efficient Consumer Response (ECR) to the next level by ensuring increased sales. CPFR. Other anticipated benefits include lower inventories. and extended response times.3. better store-level customer service. so as to plan promotion tactics and volumes. market trends. operational efficiency improvements. In some countries. improved sales. The cost to participants will be substantially lesser than what it would be. Both retailers and vendors financial and assortment planning procedures affect inventory management. inaccurate inventory. nearly 35% of retail sales are on promotion. When implemented in a proper co-ordinated manner. excessive markdowns. In Europe. and better asset utilisation. Some companies share spreadsheets. but these are different for each partner. and forecast efficiencies. Much more can be achieved through detailed analysis and careful systematic implementation of the process. reduced product returns. Collaborating on promotions is essential in these channels. and production schedules. At present.5. The purpose of this document. It enables automatic product replenishment. operational. a set of guidelines supported and published by the VICS Association changes the rules so that companies throughout the Supply Chain can simultaneously lower costs and improve customer services. Sales are increased through improved in-stock positions. It is impossible to integrate them with the systems at each end. Yet the business processes and underlying systems are often not integrated or synchronised between parties.1 Collaborative Assortment Planning for Apparel and Footwear The assortment planning process for apparel and footwear retailers and vendors is the activity of determining product placement by location and by delivery. reduced inventory across the distribution network. historical sell-thru data. In many Supply Chains. improved partnerships. The co-ordination and sharing of this information both internally and among trading partners is critical to deliver the right products to the right place at the right time. if individual participants were to develop their own systems. and sales increases. . several companies offer hosting services that run CPFR solutions for a trading community. Retailers and vendors must work together to build and modify assortment plans based upon financial plans. It has topped the list of the biggest expected benefits. unnecessary operating costs.
The challenge for manufacturers has been. Both retailers and vendors financial and assortment planning processes affect __________________. However.4 Forecasting and replenishment In recent past. departments or companies develop their own forecasts independently to each other. Either with regression analysis that examines the relationship between sales. Leading manufacturers are adapting their Sales and Operations Planning (S&OP) processes. yielding little inventory benefit for the manufacturer. high-quality POS data and POS forecasts are available from these retailers. This forecast is done according to their own specific needs and risk ending up acting based on conflicting plans. new product introductions or assortment changes that affect demand throughout the Supply Chain. Manufacturers have not previously had an account-specific demand forecast that they could use as a basis for collaboration. Increasingly. 5. Furthermore. different groups. . As a result. has received significant attention. This makes it possible to complement time series forecasting. a company can get access to better information on important demand drivers such as promotions. the concept of inter-company collaboration. many early CPFR projects were not integrated with enterprise planning. Supply Chain parties aim to make it easier to take events into account such as promotions. how to leverage these key customer forecasts in the corporate demand planning process. and other variables such as advertising or with subjective forecasting that relies on expert opinion. especially in the area of planning and forecasting. 8. Time series methods that build on historical data can forecast changes that follow continuous or recurring patterns. One benefit that is suggested to follow from this is a reduced reliance on historical records. Collaborative Forecasting: Letting Consumers Drive Supply The consolidation of demand among a small number of ever-growing retailers has increased the importance of individual accounts. it cannot accurately forecast the impact of events such as. The goal of CPFR is to change the relationship __________and create significantly more accurate information. price changes that happen irregularly. _____________ is an approach to Supply Chain planning which aims to co-ordinate planning tasks of independent Supply Chain partners.Self Assessment Questions 6. working based on one shared forecast reduces the problems related to "islands of analysis" phenomenon where. By developing processes that make it possible to adjust plans and forecasts in a collaborative fashion. Collaborative forecasting makes it possible to take benefit of the expertise of all or at least several Supply Chain members. 7. Through collaborative forecasting.
POS forecasts data for key accounts into their demand plans using statistical forecasting and replenishment planning tools. 5.to accommodate retailer-specific forecasts. This approach enhances the visibility of normal Material Requirements Planning . Reckitt-Benckiser reported a 37% reduction working with one of its key suppliers. By delegating the responsibility for supply. Procter and Gamble and Reckitt-Benckiser have both reported major benefits from Collaborative Replenishment initiatives.4. does not have to change the order handling or shipment processes used to satisfy demand through other customer channels. CRP has many flaws. Suppliers meanwhile can be caught unprepared by promotions. The supplier takes on new responsibilities but. Many Direct Store Delivery (DSD) programs operate as a continuous replenishment program as well. CRP delegates the responsibility for calculating replenishment requirements to the supplier. Collaborative demand planning is less vulnerable to overstating demand when. Instead of driving future-plans of historical shipments data. to better match supply and demand. The customer simply provides inventory or DC withdrawal information and the supplier calculates required order quantities to keep the customer in stock. rather than account-specific). and other major shifts in demand due to the short planning possibility that CRP typically uses. For example. In the U. and store-level inventory by using Collaborative Replenishment. Typically. based health and beauty chain) has experienced improvements in forecast accuracy. The CRP process is intended to isolate the replenishment calculation from other enterprise processes. In the retail arena. It also allows suppliers to compare a customers firm commitments or orders with the suppliers orders. the customer also gives up control of the process. Collaborative Replenishment: Continuous Replenishment Programs Come of Age Continuous Replenishment Program (CRP) solutions have grown in popularity over the past 10 years. Working with 11 suppliers. Longer-term forecasts are used to highlight upcoming surges and pauses that call for advanced planning. In Collaborative Replenishment both the customer and the supplier have visibility to demand. These tools are used to align the data with the shipment plans used for the rest of the customers (which remain market-based. Procter and Gamble reported a Supply Chain Wide inventory reduction of 33%.K. forward buying or diversion has taken place. in-stock positions. this process is sometimes called Vendor Managed Inventory (VMI).1 Dynamic Replenishment Dynamic Replenishment is a process that enables suppliers to compare customer forecast or planning data with their own production plans. Customers have little or no visibility to planned shipments. Many organisations have turned to Collaborative Replenishment. they are feeding customer-provided POS. In addition. The process also yields true account-specific forecasts (the basis for contributing meaningful feedback on customer plans). assortment changes. In spite of its popularity. Super drug (a U. Collaborative forecasting allows manufacturers to build demand plans that consider their customers plans and that reflect inventory in the customers Supply Chain..S. particularly in Europe. as a more balanced approach to CRP initiatives.
optimal inventory levels are analysed as transportation and operational efficiencies are maximised. The Store Replenishment Business Process Guide will assists retailers and manufacturers planning or executing storelevel initiatives by. Providing performance optimisation and benchmarking. trading partners collaborate to develop the accuracy of DC to Store and Supplier to Retail DC forecasts. Managing by exception with alerting capabilities. The Distribution Centre (DC) Replenishment Collaboration Business Process Guide outlines the methods to attain . calculate store inventory requirements. Trading partners have a direct view of how consumers are responding to new products. implementing consistent vocabulary and industry guidelines. In this system. The goal is to increase sales and reduce out-of-stocks at the most significant point of the Supply Chain where. Executed within the framework of CPFR suppliers and buyers work together to optimise the flow of inventory into the retail distribution centre and out to the stores. In addition. Working within flexible planning horizons. and expediting costs. in-stocks. and respond to on-going operational issues. the consumer purchases the product. Store Replenishment Collaboration aims to link manufacturers and retailers to plan store sales and promotion volumes. Distribution Centre Replenishment Collaboration Distribution Centre (DC) Replenishment Collaboration has been the most common starting point for trading partners. The profits attributed to store-level collaboration include greater visibility to consumer takeaway and overstock reduction. Managing multiple forecast streams.(MRP) driven execution processes such as. finished-goods inventory. and promotional execution also develop. Converting multiple units of measure. Store Replenishment Collaboration Working within the framework of CPFR. It allows suppliers to flexibly adjust to shifts in customer requirements or supply shortages. The approach increases order fill rates and reduces raw materials. Incorporating business rules agreed upon by trading partners. existing shelf distribution. to improve the replenishment and forecasting processes between their organisations. This approach helps in: Creating time fence profiles. and promotional take-away. Replenishment accuracy. purchase order processing or release processing.
This also provides the visibility needed to effectively receive or calculate out of stock information automatically and use the resulting information for sales forecasting and promotion planning.targeted service levels to the stored and increase profitability. The consolidation of demand among a small number of ever-growing retailers has increased the importance of partnership accounts. 13. Customer Collaboration embraces the ability to sense demand signals and automatically replenish the customers inventory based on actual demand. The CRP process is intended to integrate the replenishment calculation from other enterprise processes. and fulfilment planning more expeditiously. replenishment processes become more responsive. By resolving missing data and exception situations. 10. 12.5 Customer Information Quality Specification Customer Collaboration is gaining traction in many industries that are pushing to become more demand driven. or at least several. you can execute forecasting. It allows manufacturers and retailers to manage and execute joint promotions that can take into account last-minute changes. These processes are triggered primarily by actual customer demand information. Helps manufacturing companies fulfil store-level-based replenishment requirements such as cross docking. Supply Chain members. . Collaborative forecasting makes it possible to take advantage of the expertise of all. demand-driven push-pull Supply Chain. replenishment. Optimal inventory levels are analysed as transportation and operational efficiencies are maximised. 5. Exception reporting also needs to be part of this business process. This approach supports the following benefits: Enables the shift from a manufacturer push to a balanced. Unlike traditional forecast-driven replenishment with a customer collaboration strategy. Self Assessment Questions State whether following statement are true or false 9. Dynamic replenishment is a process that enables suppliers to compare customer forecast or planning data with their own production plans to better match supply and demand. 11. This is most commonly seen in consumer products and other industries that operate downstream distribution structures that extend to retailers. Merges forecast and demand-driven Supply Chain strategies. Ensures intelligent short-term demand management for baseline and promotion processes and automates the response to changing demand. POS and Electronic Product Code (EPC) data also adds to visibility across the entire Supply Chain and enhances the process.
you realise increased sales and fewer lost sales from stock-outs. Thus. and conducting replenishment order planning you can fully manage the inventories at the customers site. 15. you cannot execute forecasting and replenishment. setting contracts and service agreements in place. Other forms of customer collaboration functionalities include more traditional Vendor Managed Inventory (VMI) functionalities. 16. Self Assessment Questions State whether the following statements are true or false 14. Customer collaboration is gaining traction in many industries that are pushing to become more demand driven.5. Responsive customer replenishment processes allow you to respond slowly and less efficiently. with up to 4 small orders per day that make it impossible for the supplier to make a profit margin. 5.1 Customer Service and CPFR Over the years. Service level policies that are the benchmark across a business for all customers regardless of their service requirements.Responsive customer replenishment processes allow you to respond more rapidly and efficiently to short-term demand fluctuations in the baseline and promotion business processes. A total lack of accepting cost to serve and total cost of ownership when. including replenishment logic based on minimum and maximum stock balance limits. Customer collaboration combines forecast and demand driven Supply Chain strategies. 5. Some examples of these are: Customers abusing the service policy. Customer collaboration functionalities include more traditional vendor-managed inventory (VMI) functionalities. 18. leading to excessive distribution costs. running a forecast. once distribution costs are taken into account. we have seen many of our customer's Supply Chains that operate with significant issues and under unnecessary constraints due to poorly defined and managed customer service policies. By using your customers consumption data. Forecasting and Replenishment (CPFR) initiatives more generally provide a rich range of strategies for collaborating amongst Supply Chain partners.6 Summary Large scale assignments like the Efficient Consumer Response (ECR) in the fast moving consumer goods sector or Vendor Managed Inventory (VMI) and Collaborative Planning. 17. By resolving missing data and exception situations. While individual victories . including replenishment logic based on minimum and maximum stock balance limits.
implementations of the latter have already been reported. there has not yet been the widespread adoption that was originally hoped for. True 14. In our research. 3. False 11. Discuss continuous replenishment program (CRP) solutions its impact in European countries.7 Terminal Questions 1. False . Collaborative Planning 7. Inventory Management 8. 5. we looked at implementations across several organisations and countries and our findings show that the slow progress to date may be due to a lack of common understanding of these concepts and the difficulty of integrating external collaboration with internal production and inventory control. 5. True 10. Flow of Information 4. CPFR 2. Elaborate the concept of Supply Chain Management and its integration with the 'quality consciousness movement'. 4. False 12. False 13. True 16. 5. What is meant by Dynamic Replenishment explain its process. Paradigm 9. Customer Specific Planning 6. Discuss origin of CPFR.8 Answers Answers for Self Assessment Questions 1. Voluntary guide lines 3. True 15. How CPFR model helps guiding Supply Chain partners in setting up their relationship and processes. 2. Just-in-Time (JIT) 5.
1.2 3.1.1. False 18.9 Case Study . Refer section 5. True Answers for Terminal Questions 1. Refer section 5.1 2. Refer section 5. Refer section 5.3 4.2 5.17. Refer section 5.3.3 5.3.
10 Glossary References 1.5. Colleen Crum 4.com/library/graphics/2007-01-gaodwf01. 46 pp. Supply Chain Management: strategy.org/committees/cpfr/#f5 .vics. J. Management Science. Ryan and D. Collaborative Planning. 436 443. Forecasting.gif  Chen. Y. Drezner. F._and_replenishment  Case-studies on ERP technology for IT decision-makers  http://www.org/wiki/Collaborative_planning. Supply Chain Collaboration: How to implement CPFR by Ronald Ireland._forecasting. Lead Times and Information.wikipedia. K. and Replenishment: How to Create a Supply Chain Advantage by Dirk Seifert 2. and Replenishment (CPFR) by Dipl. Z.. and operation by Sunil Chopra. Markus Diederichs 3. Collaborative Planning.-Betriebsw.  http://www.vics. planning. Quantifying the Bullwhip Effect in a Simple Supply Chain: The Impact of Forecasting.org/committees/cpfr/#f4  http://www. Forecasting. Peter Meindl  http://en. Simchi-Levi (2000).triz-journal.