The present research paper investigates the IT application of collaborative planning, forecasting and replenishment (CPFR). The first part of the paper sets a theoretical framework which initially defines the software use and implementation, and then recognizes the key advantages of this particular software. Moreover, to be fairly critical some major pitfalls identified by academics and practitioners are also presented. At the end it is up to the individual organization to make their pros and cons analysis, acknowledging the business and its industry to come to a final conclusion. Additionally, it is of utmost importance the whole organization, regardless of the hierarchy rank, to be determined to fully implement the new technology and the outcomes will not take long.
Table of contents
Introduction and problem statement
Introduction and problem statement
Nowadays it is rather hard for companies to choose upon the IT applications to implement in their supply chains because of the broad variety of choices on one hand and their complexity in actual implementation and relevancy to the business venture on the other. No matter that software may seem universal for all businesses in fact it has different effect on the particular firm – some thrive, another do not change, third even fail. Therefore, before purchasing and installing a specific IT package companies need to be aware of the benefits it brings and also the pitfalls it carries along.
Information technology changed significantly the way business is conducted and to illustrate that a particular application called collaborative planning, forecasting and replenishment (CPFR) is further explored, analyzed and reviewed initially from an academic and then from practitioner point of view. The main goal is to present CPFR with the possible (competitive) advantages introduced to the supply chain management and also the dysfunctionalities.
Literature reveals that collaborative planning, forecasting and replenishment (CPFR) programs have been developed to work cooperatively between companies in the supply chain network. CPFR aims to enhance the demand expectation, delivery and provision and that assists companies in their operations substantially. The principle works on shared visibility on current inventory and a continuous replenishment of demanded goods and products. Although there is an ample process model developed by VICS (Voluntary Interindustry Commerce Standards), it happens often in practice that the CPFR programs take different forms (Danese, 2006). Companies employ various CPFR configurations so that effectiveness and efficiency is easily achieved (Seifert, 2003). As a matter of fact this joint cooperative IT software cuts expenditure on excessive inventory, logistics support, merchandising, transportation.
The CPFR program includes a 9 step approach of integrating participants of the same supply chain (Caridi et al., 2005), as follows:
✓ The two sides of the trade agreement (buyer and seller) formulate jointly the goals, purpose and scope of their collaboration. The participants are assigned roles, responsibilities. Also they indicate in the joint business plan the special events where demand and supply are affected and thus, the two parties plan different production scheme and promotions.
✓ A shared business plan is written, after the purchaser and supplier exchange information regarding their corporate strategy and individual business plans
✓ Point-Of-Sales records are collected, summarized, reviewed and based on the present data and potential future changes that would come from the joint supply program sales forecast are created
✓ Exceptions for sales forecast are identified
✓ Resolution about the sales exception
✓ Build up order...
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