CPFR gaining converts
Staff -- Logistics Management, 4/1/2002
The business practice known as Collaborative Planning, Forecasting and Replenishment (CPFR) is gaining traction among consumer product manufacturers, says a new study.
Nearly half of the 43 food, beverage and consumer products companies surveyed by KJR Consulting of Washington, D.C., said they were moving ahead with CPFR pilots. The consulting firm canvassed one-third of the membership of the Grocery Manufacturers Association (GMA), a trade organization headquartered in Washington, D.C. The survey was sponsored by GMA and software vendor Syncra Systems of Waltham, Mass.
CPFR involves collaboration between suppliers and retailers, which work together to develop forecasts for stock replenishment. Advocates of CPFR contend that this business strategy boosts savings by reducing inventory while increasing store sales and company profits through targeted replenishment.
The survey found that 67 percent of respondents were researching, piloting or implementing CPFR. About half of the respondents who were looking at CPFR said they planned to go ahead with their initiatives.
Despite that strong endorsement, CPFR isn't the answer for all trading partners or all types of stock-keeping units (SKUs). According to Tim Paydos, a vice president of marketing at Syncra Systems, CPFR has generated the highest payback on either highly promoted or seasonal goods, whose inventories historically have often been misaligned with demand. "If I'm going to make the investment in CPFR," notes Paydos, "I want to do it with the products with the greatest return."
Still, respondents that are currently engaged in CPFR initiatives expressed the belief that this business practice would enhance relationships between the collaborating companies. "This shouldn't be surprising as one of CPFR's goals is to have better visibility into partners' plans, thus resulting in better communication," says Jolene Magruder, manager, supply chain optimization at Nestle Purina PetCare Co. and a member of GMA's CPFR Task Force. "The working relationships now become smoother and more focused on building the companies' mutual businesses rather than on constant crisis management."
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