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Describes CPFR program and how it should be implemented ... for a successful implementation of such a program, partners must agree on confidentiality of information ... CPFR improves forecasts and increases sales.
The value chain has long suffered from 'Silos' in business partnerships and technology, because they viewed collaboration as collaboration with the enemy. But quite often the enemy is internal - a struggle many of you had for years. Today leading companies are embarking on a path of collaboration with external trading partners. These leading companies have found that collaborating as a team within the entire value chain is the best possible approach to improve the overall value chain performance. As a result of this vision of many trading partners, a new industry standard was adopted and implemented. It is called CPFR®; Collaborative Planning, Forecasting and Replenishment. CPFR® was a vision of Wal-Mart Stores, Inc. back in the mid 1990s. The basic principle says if we could create a more accurate forecast of demand and take advantage of replenishment and supply chain optimization opportunities, then we could take costs out of the entire value chain and grow revenue. This was nothing more than plain old common sense. Working together would make the forecasts more accurate.
The CPFR® vision also said that, to have the most accurate forecast, everyone should have access and visibility to a single forecast number so that all links in the value chain can contribute their knowledge of causal factors, as well as collaborate and update forecasts in a most efficient manner. In other words, let's take the best of retail management, vendor-managed transportation and supplier management knowledge, and then input them into the demand forecast to arrive at one number which would flow into the execution systems. To take it further, let's...