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

January 31, 2011 Staff 3-min. read

*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.