Operations Management: An Integrated Approach, 5th Edition

COLLABORATIVE PLANNING, FORECASTING, AND REPLENISHMENT (CPFR)

Collaborative Planning, Forecasting, and Replenishment (CPFR) is a collaborative process between two trading partners that establishes formal guidelines for joint forecasting and planning. The premise behind CPFR is that companies can be more successful if they join forces to bring value to their customers, share risks of the marketplace, and improve their performances.

In previous chapters we learned about the benefits that can be attained by sharing information with suppliers and developing long-term relationships. CPFR is a formal way of achieving this. By implementing CPFR, trading partners jointly set forecasts, plan production, replenish inventories, and evaluate their success in the marketplace. The most complete form of CPFR utilizes a nine-step process:

1. Establish collaborative relationships. Buyers and sellers formally establish their relationship, including expectations and performance measures. This is usually reevaluated annually.
2. Create a joint business plan. Buyers and sellers develop a joint business plan.
3. Create a sales forecast. Sales forecasts are generated based on available data. This is usually done monthly or weekly.
4. Identify exceptions for sales forecasts. Items that are exceptions to the sales forecast are identified.
5. Resolve/collaborate on exceptions to sales forecasts. Buyers and sellers jointly investigate exceptions by analyzing shared data.
6. Create order forecast. An order forecast is generated ...