Collaborative Planning, Forecasting, and Replenishment

Collaborative Planning, Forecasting, and Replenishment (CPFR) is a methodology of supply chain management (SCM) and integration which combines the collective knowledge resources of multiple supply partners throughout the planning and fulfillment stages of customer demand.

The CPFR model provides an adaptable template for intra-supply chain collaboration of the aspects of planning , forecasting and replenishment. The template can be used in many disparate industries and is centered around the concepts of Strategy and Planning, Demand and Supply Management, Execution, and Analysis.

Strategy and Planning
encompasses business goals for the relationship, defining the scope of collaboration and assigning roles, responsibilities, checkpoints and escalation procedures. The Joint Business Plan then identifies the significant events that affect supply and demand in the planning period, such as promotions, inventory policy changes, store openings/closings, and product introductions.

Demand and Supply Management
which includes Sales Forecasting, which projects consumer demand at the point of sale, and Order Planning and Forecasting, which determines future product ordering and delivery requirements based upon the sales forecast, inventory positions, transit lead times, and other factors.

Execution
consisting of Order Generation, which transitions forecasts to firm demand, and Order Fulfillment, the process of producing, shipping, delivering, and stocking products for consumer purchase.

Analysis
tasks include Exception Management, the active monitoring of planning and operations for out-of-bounds conditions, and performance Assessment, the calculation of key metrics to evaluate the achievement of business goals, uncover trends or develop alternative strategies.

The goals are to improve the collaboration between the various supply chain players, manufacturers, distributors, and retailers, to effect the delivery of products is a positive way through the reduction of barriers within the supply chain relationships. This will lead to better inventory management, lower out-of- stocks, better forecasting and timely replenishment which support the company goals of reducing working capital used for inventory, reducing fixed capital and infrastructure expenses, reducing operating expenses, and by growing sales each year, consistent with the expectations of the stockholders.