Collaborative Planning, Forecasting and Replenishment (CPFR) is a business solution that combines the intelligence of multiple trading partners in the planning and execution of customer demand.
Since the publication of the VICS CPFR guidelines in 1998, more than 300 companies have carried out the process. Numerous case studies of Collaborative Planning, Forecasting and Replenishment projects have resulted in stock percentage improvements of 2 to 8% for the products in the stores, accompanied by stock reduction from 10 to 40% in the supply chain.
By linking sales and marketing best practices, such as category management, supply chain planning and execution processes, CPFR increases availability while reducing the cost of inventory, transportation and logistics. The experience gained during implementations of CPFR in the past six years has yielded many new insights.
Fundamentally, the goal of CPFR is to transform the supply chain from a disjointed, ineffective and inefficient “push” system into a coordinated “pull” system based on end customer demand.
Store Replenishment Cooperation with retailers.
The assortment planning process for clothing and footwear retailers and suppliers is the activity of determining product placement by location and by delivery. Retailers and suppliers need to work together to plan product ranges based on financial plans, historical sell-through data, market trends, and adjust their production schedules accordingly. The coordination and exchange of this information both internally and between trading partners is critical to delivering the right products at the right place at the right time.
There are clear financial benefits for inventory management for both retailers and suppliers, but the business processes and underlying systems are often not integrated or synchronized. This lack of integration and synchronization creates inefficiencies in the supply and demand chains and leads to missed sales, inaccurate inventory management, excessive markdowns, unnecessary operating costs and longer response times.
Working within the framework of CPFR, “Store Supplementation Collaboration Connections” are aimed at linking processes of manufacturers and retailers to sales in the store, planning volume promotion, calculating optimal store inventory and responding to current operational matters. The goal is to increase sales and decrease out-of-stock at the most important point of the supply chain. [POS Trading Partners ultimately have a direct idea of how consumers react to new products, existing shelf distribution and promotional take-away.
Distribution Center Replenishment Cooperation
Distribution Center (DC) Complement Collaboration is the most common starting point for trading partners to improve the replenishment and forecasting processes between their organizations. Executed within the framework of CPFR, suppliers and buyers work together to optimize the flow of goods in the retail distribution centre and to the stores. Optimal inventory levels are also calculated in this system if transport and operational efficiency are maximized.
Retail Event Cooperation
The out-of-stock problem remains a thorn in the side of industry. During promotional events, the situation is even worse when the out of stock percentage doubles as consumer demand peaks. Not only do retailers and manufacturers lose sales and profits, but they also gamble with the loyalty of their customers because the promise of a special deal has not been kept.
Promotions and other retail special events generate the largest fluctuations in demand, resulting in the most out-of-stocks, surplus stocks and unplanned logistics costs. The application of CPFR is precisely aimed at tackling the biggest problems during these special situations. It does require transparency from all involved organizations and harmonization of operational business processes. Looking at the kitchen together often leads to a lot of suspicion, which means that unnecessary costs remain and the desired service level is not achieved.