CPFAR (COLLABORATIVE PLANNING, FORECASTING & REPLENISHMENT)
Introduction: CPFAR is a practice/concept that aims to enhance supply chain integration by supporting and assisting joint practices so as to minimize waste and have lean processes in place. CPFAR Origins
CPFR began in 1995 as an initiative co-led by Wal-Mart's and the Cambridge, Massachusetts software and strategy firm, Benchmarking Partners. The Open Source initiative was originally called CFAR (pronounced See-Far, for Collaborative Forecasting and Replenishment. Benchmarking developed CFAR with funding from Wal-Mart, IBM, SAP, i2, and Manugistics (the latter two are makers of accounting and supply chain management software respectively). Warner Lambert (now part of Pfizer) served as the first pilot for CFAR which was successful. Benchmarking Partners then presented CFAR to the Board of Directors of the Voluntary Interindustry Commerce Standards Committee (VICS). VICS established an industry committee to prepare for rolling CFAR out as an international standard. Based on the suggestion of Procter & Gamble's Vice President of Supply Chain, the standard was renamed CPFR to emphasize the role of planning in the collaborative process. The committees mentioned above started taking CPFAR implementation of pilot runs and gained hand-on experience. VICS lead much of the research and implementation of CPFR initiatives through its pre-determined guidelines and other investigations carried out across sectors & geographic locations.
Key Features of CPFAR
Uses e-commerce technology and process models: The use of technology is a core element of the CPFAR model since it facilitates an efficient way to information sharing which in-turn is a key driver for smooth functioning of any process as such. With the impact of geographic distances subsiding in this era of globalization, technology has transformed the way we do business, transactions, etc. a.
It facilitates lower transactions costs and greatly reduces errors due to lesser manual intervention. 2.
It provides a standardized way for manufacturers and retailers to work together and coordinate their demand forecasts across the internet/shared network. 3.
More enhanced than POS (point of sale) data planning: The process is more accurate due to the capability of the system to take into account a large no: of factors influencing the entire supply chain and hence is agile enough to respond to ever changing customer needs.
Organizes all the information exchanges that have taken place between the supplier and retailer on an electronic bulletin board. This is important from the point of view of larger business decisions that depend primarily on Business Intelligence (BI) Solutions.
Manufacturer – CPFAR minimizes the need to change production schedules back and forth. This is facilitated through better information flow and makes it all the more easily to manage supplies and logistics which reduce idle time.
Retailer – reduction of idle inventory greatly increases the cash flow and promotes others to also provide better and cheaper prices.
ECR vs CPFAR
CPFAR builds on ECR and certain elements of ECR are still applicable. CPFAR extends the business processes to include: - 1.
Information systems for capturing and transferring POS, inventory, and other demand & supply information between trading partners. 2.
Formalized sales forecasting and order forecasting processes. 3.
Formalized exception handling processes.
Feedback systems to monitor and improve supply chain performance.
Collaborative Planning, Forecasting, and Replenishment - Process Flow Diagram The diagram below shows the process of information and material flow within a supply chain network cutting across supplier/manufacturer/customer boundaries. It displays the systems which act as enablers for the flow of information and material.
CPFAR –JC Penney and Abhishek Industries
The above diagram describes the...
References: 1. Supply Chain Management - Strategy, Planning, and Operation - Third Edition By Sunil Chopra, Peter Meindl and D.V. Kalra
2. A Guide to CPFR Implementation – Accenture and ECR Europe.
7. www.vics.orgods (e.g. CRP) CPFR
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