CPFR refers to an initiative facilitating reengineering of relationships that exists between trading partners, meaning that it is a process that facilitate transactions. The initiative is based on a set of standards that are recognized by the industry as nonproprietary. CPFR provides templates that are applied in supply chain partner collaboration activities. At planning stage, the relationship is updated and established. Order replenishment and sales forecasting stages occur in a more frequent manner (Lisa, 2002, p. 45). Implementation of CPFR process involves considerable stages.
It starts with comparing of organizational data and plans with another. Such plans in comparison may be a new version against a previous plan or comparison of a plan with actual results. For smooth implementation of this model, accuracy should be maintained in the forecasting stage. For this to happen, suppliers and customers should be allowed to fully participate in the forecasting process (Boone, 2002, p. 33). If there is any discrepancy between suppliers and customers, both of them can sit, negotiate on the discrepancy and rectify it.
For example, a supplier can decide to build inventory when advancing a promotional order and hence carry less safety stock at various times. On the hand, a customer can decide to reduce the impact of supply problems by altering the product mix. The process in long run creates win-win scenario by tying the seller and the buyer together in their compatible goals. As they compete as one, these two parties form a value chain that comes out ahead of other partners still caught up in price negotiations (Corsi, 2004, p. 12).
Initially, operations of supply chain performed their practices in gaps, with their financial plans taking non integrated forecasts and supply planning. This poor system led to increased expedited activity, lower order fill rates and higher inventory levels. In this process, customers’ performance can be improved through collaborative relationship with the vendor they are in touch. The most promising environment for this process can be created by net markets or e market processes. This accelerates its applicability even within large firms.
This model has been known as independently run trading exchange that has consistently focused on spot transactions for indirect materials. This fact stretches to the consortia of primary industry players who prefer extensive collaboration and at the same time advocating for direct material fulfillment and procurement. Collaborative planning, forecasting and replenishment criterion is currently providing an efficient hub for collaboration between transportation providers and shippers by helping customers to translate customer shipment forecasts to equipment predictable demand such as ships, classics and containers (Turner, 2003, p.
34). To fully implement it after making a full decision, there is need to solicit senior management champion. This is because in collaboration efforts enhancement, a cultural shift is required. This implies that the initiative must first receive top level support. The second step is allocating resources such as consultants and project leader. This is because CPFR process can adequately be facilitated by consultants, internally selected team as well outside solution provider.
Then, a pilot should be picked, as this creates certainty that the trading partner shares collaborative vision. Because the mission is getting to the set goals and objectives, establishment of the win-win potential to be applied to the entire value chain is important. Finally, it is advisable to drive into the process if all above guidelines are met. This involves aligning relationships with trading partners, creating extra value within the supply chain and finally competing more effectively (Lowson, 2002, p. 11).
Bibliography Boone Ram, 2002. New directions in supply chain management: Technology, strategy and implementation. New York; AMACON, P. 33. Corsi Thomas, 2004. In real time: Managing the new supply chain. London; Praeger, p. 12. Lisa Harris, 2002. Marketing the E-Business. London; Rutledge, p. 45. Lowson Robert, 2002. Strategic operations management: The new competitive advantage. London; Rutledge, p. 11 Turner Marcia, 2003. Kmart’s ten deadly sins: How incompetence tainted an American icon. Washington DC; Wiley, p. 34
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