Andraski takes issue with those who claim that the Collaborative Planning, Forecasting and Replenishment (CPFR) program hasn't fulfilled its potential. Created by Wal-Mart Stores to manage its internal forecasting and replenishment efforts for select consumer items, the initiative was subsequently turned over to VICS for the benefit of all industries. Developers quickly realized the necessity of adding collaborative planning to the mix. Today, CPFR helps suppliers and retailers agree on the type and quantity of product to be sold, when it will be promoted, and where it will be displayed. The program has been of particular benefit to Asian-based suppliers that must deal with lengthy supply lines over multiple time zones. Andraski argues that CPFR has gone a long way toward improving the availability of product on the shelf, and making retail forecasts more accurate.
The biggest hurdle to collaboration is, of course, trust. At the outset, retailers were concerned that any sensitive information they conveyed to suppliers would somehow be revealed to their competitors. That hasn't happened, says Andraski. Today, participating retailers routinely supply vendors with point-of-sale data, along with information on inventory that is on order, on hand, in transit, at the distribution center and part of the forecast. Manufacturers use the data to determine where to direct product. They can make last-minute changes based on actual buying trends, instead of allowing inventory to languish in stores where sales are slow.
CEOs today get measured on a number of metrics, including working capital, sales, and profit and loss. The deployment of CPFR has led to gains in all of those areas, Andraski claims.
Challenges remain. Companies still aren't fully sharing critical supply and demand data, he says. Trust remains an issue within many organizations, especially those that aren't accustomed to satisfying both internal and external customers. In addition, the growing popularity of outsourcing as a strategic tool has created the need to include third-party service providers in the collaborative effort.
Many companies remain stuck in a silo mentality, Andraski says. What's needed is a rethinking of the way business is done, both inside and outside company walls, including a candid assessment of each partner's strengths and weaknesses. Such an effort, he says, "is absolutely essential to a supply chain program."
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