Collaborative Planning, Forecasting, and Replenishment (CPFR): An Introduction

Collaborative Planning, Forecasting and Replenishment (CPFR) is the sharing of forecasts and related business information among business partners in the supply chain to enable automatic product replenishment. CPFR, a set of guidelines supported and published by the VICS Association, changes the rules, so that companies throughout the supply chain can simultaneously lower costs and improve customer services. The CPFR solution itself does not have to be deployed by each trading partner. Instead, several companies offer hosting services that run CPFR solutions for a trading community. The cost to participants will be substantially lesser than what it would be, if individual participants were to develop their own systems. The goal of CPFR is to change the relationship paradigm and create significantly more accurate information that can drive the value chain to greater sales and profits. It has noted increased promotional service levels and reduced inventory across the distribution network, improved sales, operational and forecast efficiencies and topped the list of the biggest expected benefits. Other anticipated benefits include lower inventories, improved partnerships, reduced product returns, operational efficiency improvements, and sales increases.