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Collaborative Planning, Forecasting and Replenishment (CPFR), is a business concept that aims to enhance supply chain efficiency and integration by supporting joint practices and coordinating activities throughout the supply chain. 

CPFR is a supply chain model where a business implements plans with its suppliers/customers to optimise their supply chains. It enables inventories to be moved more efficiently, in the correct quantities, to the correct locations in order to meet customer demand.

The CPFR model establishes a common language, common processes and common metrics to assist the supply chain partners to achieve these goals.

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A successful CPFR model should consist of four crucial cyclical elements:

•    Strategy and planning – the strategy for collaboration between supply chain partners What are the key features of CPFR?including the joint business plan
•    Demand and supply management  - the forecasting of sales and order planning
•    Execution – order generation and fulfilment
•    Analysis – the management of exceptions and assessment of performance

 

The nine working steps of a CPFR model carried out by the supplier and then the buyer can be found below:
•    Develop Front End Agreement
•    Create the Joint Business Plan
•    Create the Sales Forecast
•    Identify Exceptions for Sales Forecast
•    Resolve/Collaborate on Exception Items
•    Create Order Forecast
•    Identify Exceptions for Order Forecast
•    Resolve/Collaborate on Exception Items
•    Order Generation

One of the main CPFR features is joint visibility and product replenishment through the supply chain. The information is shared between partners – suppliers and retailers – in order to plan end-customer demands and therefore improve supply chain effectiveness. The result of this will be a joint, transparent and coordinated system based on customer needs.

CPFR ensures a business’s processes and business plan is aligned with that of its supply chain partners to increase end-end supply chain efficiency, keep costs to a minimum and ultimately deliver a competitive advantage.

The main benefits of CPFR include:

•    Improved accuracy of sales and order forecasts
•    Reductions in inventory levels
•    Closer relationships among the supply chain partners
•    Reduced supply chain uncertainty
•    Realisation of supply chain cost reductions
•    More effective mitigation of supply chain risks
•    Improved flow of materials and information up and down the supply chain
•    Greater efficiency in production and manufacturing

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Manufacturers, distributors, and retailers all want the same thing: the right product supplied to the right place at the right time. At TrueCommerce, we connect and integrate our customers with their supply chain partners to accelerate sales using proven inventory management methods such as Vendor Managed Inventory (VMI) and Collaborative Replenishment (CR).

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