cpfr- basics nikunj mohit am1 mbae htw

7/26/2019 Cpfr- Basics Nikunj Mohit Am1 Mbae Htw

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Collaborative Planning,Forecasting & Replenishment

(CPFR)- Basics

Presentation By:Mohit SharmaNikunj Khurana


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FLOW OF PRESENTATIONIntroduction of CPFR

Evolution of CPFR

CPFR Model

CPFR: Tasks & Key Principles

CPFR: Benefits & ChallengesAM1_MBAE_HTW_Nikunj_Mohit 2


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Introduction

A business process for valuechain partners to coordinatesplans in order to reduce the

variance between supplyand demand.

VISIONTo build mutual profitable

volume growth throughflawless continuous product

flow to our consumer.

StockShopDeclineDemand

AM1_MBAE_HTW_Nikunj_Mohit 3


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What is CPFR?

A business practiceTrading partners working together in

planning fulfilling customer demand. Links sales and marketing best practices to

supply chain planning and executionprocesses.

Objective is to increase availability to thecustomer while reducing inventory,transportation and logistics costs.



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Modes of CPFR


Basic CPFR: A limited number of business processes integrated between

a limited number of supply chain partners.

Advanced CPFR goes beyond data exchanges to synchronise forecasting

information systems and coordinate planning and replenishment

processes

Developed CPFR: Typically involves a greater number of data

exchanges between two partners, and may extend to suppliers taking

responsibility for replenishment on behalf of their customer


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History

1995-CFAR

30th July 1996

1998-VICS

CPFR evolved from ECR (efficient consumer response)

Prior to ECR--Relationships often adversarial.-Little or no joint planning-Lack of information sharing results inunpredictable ordering patterns,excessive inventories, service failures.



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CPFR ECR VMI TSC

Manufacturer Retailer

DetermineProduction

Quality

FulfillRetailerOrder

DevelopDemandForecast


FulfillCustomerDemand

DetermineOrder

Quantity

Track Inventory Leveland Backorder

Quantity


Quantity

Products Shipped

No information is shared

Information Shared and Decision made in Traditional Supply ChainAM1_MBAE_HTW_Nikunj_Mohit 7Source: Benefits of CPFR and VMI Collaboration Strategies: A Simulation Study

ISSN: 1984-3046 Journal of Operations & Supply Chain Management Vol. 6 No. 2


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CPFR ECR VMI TSC


DetermineProduction

Quality




DetermineOrder

Quantity


Quantity


Quantity

Products Shipped

Information Shared and Decision made in VMI Supply Chain

Sales and Inventory Information

AM1_MBAE_HTW_Nikunj_Mohit 8Source: Benefits of CPFR and VMI Collaboration Strategies: A Simulation Study ISSN: 1984-3046 Journal of Operations & Supply Chain Management Vol. 6 No. 2


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CPFR ECR VMI TSC


DetermineProduction

Quality




DetermineOrder

Quantity


Quantity


Quantity

Products Shipped

Information Shared and Decision made in CPFR Supply Chain

Forecast, Sales and Inventory Information

AM1_MBAE_HTW_Nikunj_Mohit 9Source: Benefits of CPFR and VMI Collaboration Strategies: A Simulation Study ISSN: 1984-3046 Journal of Operations & Supply Chain Management Vol. 6 No. 2


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CPFR extends ECRs business processes toinclude:

Information systems for capturing and transferring

point-of-sales (POS), inventory, and other demand &supply information between trading partners

Formalized sales forecasting and order forecastingprocesses

Formalized exception handling processes Feedback systems to monitor and improve supply

chain performance

10Source: http://scm.ncsu.edu/public/cpfr/ AM1_MBAE_HTW_Nikunj_Mohit

ECR CPFR
http://scm.ncsu.edu/public/cpfr/http://scm.ncsu.edu/public/cpfr/http://scm.ncsu.edu/public/cpfr/http://scm.ncsu.edu/public/cpfr/


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The Collaborative Process

Manufacturer

Retailer Forecast Drivers In stock position

Fill Rate Consumer Demand Price Changes Growth Plans Distribution Channels

Common EventCalendar

Joint Forecast

Retailer

Manufacturer Forecast Drivers Capacity Order Lead time Consumer Behavior Product Availability Promotions Raw material supply

Joint Business Planning



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CPFR Process1. Front-End Agreement

2. Joint Business Plan

O n c e

Q t r .

CollaborativePlanning

3. Create Sales Forecast4. Identify exceptions5. Resolve exceptions W

k , M o Collaborative

Forecasting

6. Create Order Forecast7. Identify exceptions8. Resolve exceptions W

k , M o Collaborative

Replenishment

9. Generate OrderAM1_MBAE_HTW_Nikunj_Mohit 12


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CPFR: Key PrinciplesThe consumer is the ultimate focus of all efforts

Buyers (retailers) and sellers (manufacturers) collaborate at every

level

Joint forecasting and order planning reduces surprises in the supply

chain

The timing and quantity of physical flows is synchronized across all

parties

Promotions no longer serve as disturbances in the supply chain

AM1_MBAE_HTW_Nikunj_Mohit 13Source: http://cpfr.org/


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CPFR Business Model Roadmap

AM1_MBAE_HTW_Nikunj_Mohit 14Source: CPFR.org Website CPFR1998, VICS


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8 collaborationtasks form cycleof 4 activities. Eachactivity consists of twocollaboration tasks, plusindividual tasks for each ofthe Retailer and Manufacturer.

CPFR Reference Model &Tasks

AM1_MBAE_HTW_Nikunj_Mohit 15Source: http://cpfr.org/


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Strategy & Planning

Establish the ground rules for the

collaborative relationship.

Determine product mix and

placement.

Develop event plans for the period.



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Demand & SupplyManagement

Sales forecasting: Projects demand at the point of sale

Order planning/forecasting: Determines future product order &

delivery requirements based upon

the sales forecast.

Takes into account inventory

positions, transit lead times,

shipment quantities, and other

factors.AM1_MBAE_HTW_Nikunj_Mohit 17


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ExecutionPlace orders, prepare and delivershipments.

Receive and stock product on retailshelves.

Record sales transactions and makepayments.

Majorily divided into two parts:Order generation Transitions

order forecasts into firm demand

Order fulfillment Producing,shipping, delivering, and stockingthe products



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AnalysisMonitor planning and executionactivities for exception conditions

Aggregate results and calculate key

performance metrics

Share product and market insights.

Adjust plans and processes for

continuously improved results



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Bull whip effect

Customer demand forecast = 10 units

Suppliers Producers Distributors RetailersProducts &Services

Products &Services

Products &Services

Information

Key: = Inventory Levels

10 Units 10 Units 10 Units

10 Units 10 Units10 Units



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Benefits of CPFR

Cost reduction Lower Inventoriesfor higher profits

Improved customerservice trough

better forecastingtechniques

Improved ROI on

Technologyinvestment

Improvedrelationships

between tradingpartners

AM1_MBAE_HTW_Nikunj_Mohit 21Source: Collaborative Planning, Forecasting and Replenishment: ResearchPaper by Tuomas Toiviainen & Jeffrey Hansen


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Benefits for Retailer

Better store selfstock rates

Lower inventorylevel

Higher sales Lower logisticscost



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Benefits for Manufacturer

Better customerservices

Lower inventorylevel

Higher salesFaster

replenishmentcycle



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CPFR Benefits: Factual

AM1_MBAE_HTW_Nikunj_Mohit 24Source: http://www.vics.org/docs/committees/cpfr


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Challenges in CPFR

SeniorManagement

Buy In

No sharedtarget

Selection ofCPFR partners

Lack of trust ConfidentialityCulturalChange

AM1_MBAE_HTW_Nikunj_Mohit 25Source: CPFR: A White Paper (J.D. Edwards)


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Conclusion Integrating the organization with its trade partners more

effectively to realize mutual benefits through exception basedcommunication.

Buyers benefit from reduced prices, better service levels andsynchronized operations.


Overall, it is a solution for all.


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ReferencesBenefits of CPFR and VMI Collaboration Strategies: ASimulation Study; ISSN: 1984-3046 Journal of Operations &Supply Chain Management Vol. 6 No. 2CPFR.org Website CPFR1998, VICS

http://www.vics.org/docs/committees/cpfr http://scm.ncsu.edu/public/cpfr/ Collaborative Planning, Forecasting and Replenishment:Research Paper by Tuomas Toiviainen & Jeffrey Hansen

CPFR: A White Paper (J.D. Edwards)Wikipedia Internet: http://en.wikipedia.org/wiki/Logistics

http://www.vics.org/docs/committees/cpfrhttp://scm.ncsu.edu/public/cpfr/http://en.wikipedia.org/wiki/Logisticshttp://en.wikipedia.org/wiki/Logisticshttp://scm.ncsu.edu/public/cpfr/http://scm.ncsu.edu/public/cpfr/http://www.vics.org/docs/committees/cpfrhttp://www.vics.org/docs/committees/cpfr


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