Has your organization been struggling to deliver a consistent fill rate
to your client or service level to your client’s customers? Has it been challenging for your company to keep decent inventory coverage or maintaining satisfying forecast accuracy? If you answered yes to one of these questions, it might be time for your corporation to rethink some aspects of your supply chain. In today’s competitive market, it is more and more difficult (if not almost impossible) to gain efficiencies and improve demand response for companies working in silos. One of the key enablers of efficiencies and improvements across supply chains is to create and use collaborative planning, forecasting and replenishment
(CPFR) strategies across organizations’ boundaries. CPFR strategies allow aligning of multiple S&OP processes and jointly plan supply chain activities to ensure that the joint business plans between organizations are respected, while minimizing
costs and maximizing efficiency from end-to-end of your supply chain. Collaboration is a journey; it is built step by step. It requires a significant investment of time and resources. Each client has a different mission, organisational structure, targets, objectives and so forth. There is no “one size fits all” solution; collaboration has to be adapted and tailor made for each major customer. Hence, the first step is to identify for which customers the return on investment will be the greatest. The client needs to have a collaborative mindset, an open mind and represent a significant percentage of your total turnover. CPFR Is Collaborative By NatureSecondly, you need to determine which individual in your organization has the right skills and knowledge to build such an important project. This person needs outstanding client facing and PR skills while having a great and extended knowledge of internal processes, systems, business opportunities and a great sense of the “big picture”. To kick off the CPFR project, the objectives, priorities and expectations of both parties need to be discussed, defined and agreed. Furthermore, the customer’s processes, systems and operational rules have to be mapped and completely understood. Subsequently, the collaboration project leader has to realise a quick “win-win” in order to gain the trust and build relationship with the customer’s organisation. I can’t stress enough the importance of relationship and trust for successful CPFR. Afterwards, joint key performance indicators need to be established. Collaborative companies need to agree on SMART objectives (Specific, Measurable, Attainable, Realistic or Relevant and Time based). A target for each KPI has to be determined. I highly recommend creating a weekly scorecard or dashboard displaying all the KPI to track and monitor. This dashboard has to be shared between all stakeholders of both corporations. It is very useful to monitor KPI, identify opportunities and keep everybody informed of the project’s progress. Corrective actions need to be taken to improve results and tackle the different challenges and opportunities. If you are able find the right balance of all these ingredients, using the right resources in the right time, your organization will definitely become the best in class supplier for your customer! CPFR strategies are great tools to make your supply chain a competitive advantage in today’s market! Cedrick Laporte-Roy How much do you know about CPFR? If you’ve never heard of it, have a quick read through this post and you’ll understand the basics of CPFR in the supply chain profession. CPFR is the acronym for collaborative planning, forecasting and replenishment, a practice developed to reduce supply chain costs through collaboration among what may be many partners in a single supply chain. Origins of CPFR in Supply ChainCPFR is no vague or loose concept with a fancy name. It was in fact developed by The Voluntary Interindustry Commerce Solutions (VICS) Association, which created a framework and set of guidelines for conducting CPFR in supply chains. Since emerging, CPFR has been adopted cautiously by some organisations and more wholeheartedly by others. For example, home appliance giant Whirlpool adopted CPFR for its supply chain and enjoyed immense success. Before CPFR was adopted, Whirlpool was struggling with a forecast error rate of 70%, which reduced to 11% after the company and its supply chain partners began working together under the CPFR framework. The Four Phases of CPFR in Supply Chain Collaboration There are four key elements to practicing CPFR in supply chain operations. These can be briefly described as follows: Strategy and Planning: This phase involves laying down the strategy for collaborative relationships between supply chain partners. The idea is that all organisations involved in partnership share an agreed scope of collaboration, common business goals. Roles, responsibilities and procedures are also set out in the strategy and planning phase. Demand and Supply Management: This is the element which focuses on sales and order forecasting and the planning of orders. Execution: This is the phase concerned with the processes of producing, stocking, dispatching, and delivery of materials to end-customers. Analysis: This element comprises the management of exceptions in the fulfillment process, along with assessment of supply chain performance. The Benefits of CPFRInitiating a supply chain CPFR program is not without challenges. The companies involved must be prepared to work on cultural change and alignment, agree rules around confidentiality, and secure buy-in from senior management teams. However, when the adoption of CPFR in a supply chain is successful, there are a number of key benefits, which include:
When CPFR partners are able to collaborate effectively and align on the use of technology, the model can also facilitate improved system integration and simplify business processes, for example by eliminating manual process steps. Everyone Wins When CPFR is EffectiveWhen CPFR is effectively adopted and managed, win-win opportunities abound. The customer at the end of the supply chain benefits from improved service levels and product availability, so ultimately, everyone is happy. CPFR can be a great help in improving perfect order performance and garnering customer loyalty. You can learn more about perfect order and customer service in Supply Chain Secrets, my book of practical tips for saving money in supply chain operations. If you’d like to preview Supply Chain Secrets, along with other supply chain books that I’ve authored, you can see an overview of each title by visiting the Book Store on this website. What is the function of a collaborative planning forecasting and replenishment CPFR system?Collaborative Planning, Forecasting and Replenishment (CPFR) is an approach which 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.
What is collaborative planning forecasting and replenishment CPFR and how does it help supply chain partners synchronize their plans and actions?Collaborative planning, forecasting and replenishment involve the joint determination of forecasting through pooled knowledge and information. CPFR enables trading partners to improve operational efficiency through a systematic process of sharing and utilizing information across firm level boundaries.
What is collaborative forecasting?Collaborative forecasting or forecast collaboration makes use of available information and latest technology to force a shift from independent, forecasted demand to dependent, predictable demand. This essentially implies real-time information sharing about demand among supply chain partners.
What is CPFR example?For example, home appliance giant Whirlpool adopted CPFR for its supply chain and enjoyed immense success. Before CPFR was adopted, Whirlpool was struggling with a forecast error rate of 70%, which reduced to 11% after the company and its supply chain partners began working together under the CPFR framework.
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