Collaborative Forecasting And Replenishment

Collaborative Planning, Forecasting and Replenishment (CPFR) – a Dated Fad or an Emerging Best Practice?

Leading companies are increasingly using external partner collaboration to improve value chain performance. As a result of enthusiasm around trading partner collaboration, an industry standard was adopted and implemented by industry leaders during the 1990’s. It was called Collaborative Planning Forecasting and Replenishment (CPFR).

CPFR was originally a vision of WalMart in the mid 1990s. The basic principle says that if a more accurate forecast of demand is created and replenishment is executed using this more accurate collaborative demand forecast, then significant costs can be removed from the value chain without impacting service levels. The CPFR vision also said that, to have the most accurate forecast, everyone should have access and visibility to a single forecast number so all links in the value chain can contribute their knowledge of causal factors in which to collaborate and update the forecast to be more accurate.

However, the state of the art in regard to information systems to support CPFR was abysmal. Corporation were struggling to get new ERP systems up and running, data integrity was horrible, and IT bandwidth non-existent. So, the CPFR vision was never fully realized.

Fast forward to 2008. Eight years since Y2K – the now infamous IT bogey… Today, systems have matured while hosted (OnDemand or SaaS) CPFR solutions are available that offer high security, data validation, and span corporate firewalls. For Steelwedge, CPFR has become yet another element in its rapidly growing toolset of solutions (which includes collaborative forecasting, sale and operations planning S&OP, demand planning, supply planning). This toolset supports the integrated business planning requirements of companies facing intense global competition. CPFR is no longer a vision but rather an imperative.

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