One area that causes significant pain for Vanguard clients is their inability to meet specific service levels or fill rates. This occurs across many industries and product types. Collaborative Planning Forecasting and Replenishment (CPFR) is often the answer.
About Collaborative Planning Forecasting and Replenishment (CPFR) 101
CPFR is a “concept that aims to enhance supply chain integration by supporting and assisting joint practices. CPFR seeks cooperative management of inventory through joint visibility and replenishment of products throughout the supply chain. Information shared between suppliers and retailers aids in planning and satisfying customer demands through a supportive system of shared information” per Wikipedia.
CPFR is an approach to improve business performance between two organizations. Through sharing and collaborating around plans, costs are minimized and efficiencies are optimized. Collaboration means different things to different organizations but at its root, it is the sharing of information. For example, say an organization openly shares its supply plan with its suppliers. As the plan evolves over time, the suppliers have greater ability to meet their demand and improve their overall performance.
Collaborative Planning Forecasting and Replenishment (CPFR) 101 objectives
CPFR intends to optimize the supply chain through:
- Improving customer service levels
- Reducing or eliminating stock outs
- Reducing over-buying of inventory
- Delivering right time, right place inventory
- Optimizing forecast accuracy
Collaborative Planning Forecasting and Replenishment (CPFR) 101 challenges
Like any new process, there are challenges to implementing CPFR. Following are the most common challenges:
- Any change requires executive sponsorship; without it, expect low adoption
- Organizations must trust their trading partners in order to share information
- CPRF has associated costs; organizations must plan accordingly and commit to their budget
CPFR provides a framework that covers a broad range of issues, including demand forecasting, inventory management, production and replenishment planning, and order fulfillment. How you implement it, what the processes are, how your people are trained and what software you use to enable it all have a huge impact on the success of your CPFR initiative.