*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
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.
- 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.)
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
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
- 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.
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.
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.