CPFR Model: 2. Demand & Supply Management: Collaborative Planning, Forecasting & Replenishment

*h2. CPFR Model: 2. Demand and Suply Management

What Is CPFR Demand and Supply Management?
Sales Forecasting Overview
Sales Forecasting Steps
Sales Forecasting Output
Order Planning / Forecasting Overview
Order Planning / Forecasting Steps
EXAMPLE: How Sales Forecasts Drive Order Forecasts …
Order Planning / Forecasting Output

h2. What Is CPFR Demand and Supply Management?

(VICS CPFR Model)

Project POS demand and order and shipment requirements over the planning horizon.

• Sales forecasting
  • Projects demand at the point of sale
  • Order planning / forecasting
  • Determines future product order & delivery requirements based upon the sales forecast.

• Takes into account inventory positions, transit lead times, shipment quantities, and other factors.

h2. Sales Forecasting Overview

• Consumption data is used to create a sales forecast.
• This consumption data differs depending on the product, industry, and trading partners:
  • Retailer POS data
  • Distribution center withdrawals
  • Manufacturer consumption data

• Important to incorporate information on any planned events (ex. – Promotions, plant shut downs, etc.)

h2. Sales Forecasting Steps

1. Analyze current joint business plan

• Analyze the potential effects of the current joint business plan on future retail sales

2. Analyze causal information

• Analyze the potential effect of causal factors on future retail sales based on historical events and the resulting sales impact

3. Collect and analyze consumption data

• Point-of-Sale (PoS) data, warehouse withdrawals, manufacturing consumption

4. Identify planned events

• Store openings or closings, promotions, or new product introductions

• This comprehensive list of events will be used to populate a shared-event calendar

5. Update shared event calendar

• Align events from each trading partner, resulting in a common plan

• Agree upon this short-term event plan

6. Gather exception resolution data

• Gather sales forecast exception resolution data from previous iterations

7. Generate sales forecast

• Generate the forecast for a given period with forecasting tools that use all relevant information and guidelines. Either partner or both partners may generate the sales forecast, depending upon the scenario

h2. Sales Forecasting Output

A single sales forecast generated by one or both parties

• Used as a baseline for the creation of an order forecast, as well as other supply chain activities

h2. Order Planning / Forecasting Overview

• Sales forecast, causal information, inventory policies, etc. are used to generate a specific order forecast.
• Actual volume numbers are time-phased and reflect inventory objectives by product and receiving location.
• The short-term portion of the forecast is used for order generation.

• The longer-term portion is used for planning.

Order Planning / Forecasting Steps

h2. EXAMPLE: How Sales Forecasts Drive Order Forecasts …

Using POS forecast and inventory policy information, we can calculate when each store needs to release an order to the Retailer DC …

…and this info is then used to generate a replenishment forecast for the DC.

The same process can be used to develop an order forecast for the manufacturer.

h2. Order Planning / Forecasting Output

A time-phased, netted order forecast.

• The order forecast allows the seller to allocate production capacity against demand while minimizing safety stock.
• The real-time collaboration reduces uncertainty between trading partners and leads to consolidated supply chain inventories.

• Inventory levels are decreased, and customer service responsiveness is increased. A platform for continual improvement among trading partners is established.