CPFR Model: 4. Analysis – Performance Assessment and Collaboration
- Performance assessment is essential to any understanding of collaboration benefits.
- The specific measures can vary from one situation to the next, but generally fall into two categories:
- Operational measures: fill rates, service levels, forecast accuracy, lead times, inventory turns, etc.
- Financial measures: Costs, item and category profitability, etc.
- In reality, partners are often reluctant to share financial measures and estimates of “profitability” can vary widely, depending on how one defines and assigns costs.
Determine if negotiation is required.
- Not all instances of resolving exceptions require detailed negotiations with parties. Remember—negotiation is a time consuming process!
- Discussion Question: When should exception negotiation occur? In what circumstances?
- Discussion Question: What areas or issues besides price and delivery date may require negotiation between the participants?
[Negotiation will be covered in depth in module 4?]
Each collaboration task has corresponding enterprise tasks
Most retailers and manufacturers are already doing these tasks!
CPFR provides a framework for coordinating these efforts.
- CPFR is always superimposed on an existing demand planning and replenishment process
- Compatible with either VMI or conventional ordering processes