Collaborative planning, forecasting and replenishment (CPFR) is hardly a new concept, but it's more relevant now than ever before. And it has to involve both suppliers upstream and customers downstream, says Noha Samara, senior director analyst with Gartner.

CPFR represents an effort to move beyond transactional relationships with strategic suppliers and customers, to ones that are based on true collaboration, Samara says. That’s especially vital in today’s environment of extreme uncertainty, where supply chain partners are in need of faster and more informed decision-making.

In embracing the notion of collaboration both upstream and downstream, companies face four major challenges, Samara says.

First is the question of who within the organization owns the CPFR effort. Is it procurement or planning? Or is CPFR a separation function entirely, as it might be in a larger company? Collaborating “is not a small job,” Samara says. “You can’t do it in your free time.”

Second is a lack of resources to support CPFR. The initiative requires heavy investment in time, money and technology.

Third is the need to ensure that all participants are benefiting from collaboration. “What’s in it for them?” Samara says.

And fourth is the difficulty of selecting which suppliers and customers to collaborate with. A company might have thousands of suppliers, and can’t possibly give them all equal attention. “It’s about focusing your efforts where they matter, and being selective on where you want to collaborate,” Samara says.

Of particular importance today is the rise of the chief supply chain officer, who can guide a dedicated CPFR effort. “Research shows that organizations are two times more likely to achieve better performance when they feed insights from key partners into their decisions,” Samara says.

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