Planning, Forecasting and
What is CPFR ?
CPFR is a tool used to enhance the supply chain that
should optimally results in lower inventories, logistic
costs and create efficiency in the whole supply chain to
CPFR uses cooperative management in sharing key
information about the supply chain between suppliers
and retailers (sellers and buyers) who work together to
satisfy the needs of the end customer.
What are the Typical Tasks Performed under CPFR ?
In more detailed description of CPFR, the four
collaborative activities are divided into 8 tasks – two for
each collaborative activity:
What are the Benefits of CPFR For Retailers?
The benefits include better store shelf stock rates,
lower inventory levels, higher sales, and lower logistics
costs. This leads to higher customer satisfaction and
increased profits for the retailer.
The whole purpose of a retailer is to maximize profits.
Maximizing profits increases the financial strength of the
retailer, allowing it to invest its’ profits in different
business ventures, allowing for expansion.
What are the Benefits of CPFR For Manufacturer ?
If a manufacturer is known for having good customer
service, new clients are more likely to approach the
manufacturer for new manufacturing contracts, which
also increases profits.
What are the Challenges For CPFR ?
No shared targets, having a trading partner that
focuses on the traditional supply chain steps, and not on
the exception/review process.
Not having adequate information
The lack of trust in sharing sensitive information, the
lack of internal forecast collaboration, and fragmented
What are the Next Steps For CPFR ?
As the dynamics of supply chain and consumer
demand patterns change, CPFR needs to adjust
CPFR would be to include multiple Tiers to the
model, where all the suppliers could communicate and
share information not only with the retailer but with each
other at the same time.
To increase the importance of transportation in the
model by including outside logistics firms into the system
Efficient Consumer Response
Introduction to ECR
Efficient Consumer Response (ECR) is a grocery
industry management strategy designed to make the
industry more efficient and responsive to consumers'
ECR is a grocery industry supply chain management
strategy aimed at eliminating inefficiencies, and
excessive or non-value-added costs within the supply
chain. Thus, delivering better value to grocery
It is designed to re-engineer the grocery supply chain
away from a “push system” in which manufacturers
“push” products into stores, towards a “pull system” in
which products are “pulled” down the supply chain into
The ultimate goal of ECR is to produce a
responsive, consumer-driven system which allows
suppliers to work together in order to maximize
consumer satisfaction and minimize cost.
In order to achieve the goal, ECR proposes changes
in nearly all the grocery industry business practices to
make them efficient.
The technologies, which are primarily electronic
commerce (ecommerce) components, are used to
automate these efficient business processes, as well as
to enhance the
communication and relationships between companies.
ECR is an application of ecommerce within the
The figure also demonstrates via arrows how
subordinate ECR factors contribute to super-ordinate
factors and, finally, to the practice of ECR overall.
ECR factors and relationships
Efficient store assortment
Efficient product introduction
Continuous replenishment program (CRP)
Barcodes / Scanners
Electronic Data Interchange (EDI)
Computer-Aided Ordering (CAO)
Cross-Docking/Direct Store Delivery
ECR adoption issues
Creating Performance Measures
Level of program and technology implementation
In order to promote ECR implementation, there is still a
• investments in communication both in a technological
and behavioral sense to address the reluctance in
sharing information between trading partners.
• Training to address the inadequacy of skilled personnel
and to develop clear road maps for the implementation
• Investments in IS to achieve compatibility between
• Reassessment of priorities for resources.
• Improving the strategic use of ECR to longer term
business growth to overcome the problem of conflicting
VMI-Vendor Managed Inventory
Introduction to VMI
Definition and Process Description
Vendor Managed Inventory (VMI) is a concept and
process for consumption-based Supply Chain Management.
It requires the supplier to maintain inventories within
predefined and mutually agreed thresholds based on a min /
The supplier can freely deliver within this indicated range.
The basic requirement for a successful VMI process is a
good partnership and cross company information sharing
and transparency close to real-time. Therefore
communication and visualization of the min / max-range, the
inventories and the gross demands of the customer is
Basic Principles and
VMI is based and controlled using the following information:
Customer’s actual gross demands = planned consumption
(BOM explosion of the production plan without further
Actual customer inventory and daily consumption
Actual in-transit inventory
Actual supplier finished product inventory (optional)
Agreed minimum and maximum stock levels (fixed quantities or
dynamic expression as days of stock)
The Initialization Process
The Service Process
The Operative Process
Goals and Benefits
Reduced non value-added
activities and administration
More secure and efficient Supply
Reduced Inventory and Transport
Multi-Sourcing: VMI is not limited to single-sourcing. Prerequisites for using
Separation of supplier-specific inventory information
Separation of planned consumption per supplier
The main focus is on direct material for series production, however other
products may also be controlled by VMI.
The predictability, reliability and relative stability of the demands is
(VMI does not resolve allocation problems or very volatile demands)
All data has to be up-to-date and correct, and sent on a regular basis, e.g.
Flexibility agreements should be committed
Bilateral agreements regarding transport are essential (frequency, minimum
Tracking / Alerting / Early
Based on all the information flows described above an
alert system is necessary to provide early warning of
issues requiring corrective action.
ERP is a software architecture that facilitates the flow
of information among the different functions within an
Similarly, ERP facilitates information sharing across
organizational units and geographical locations.
It enables decision-makers to have an enterprise-wide
view of the information they need in a timely, reliable and
ERP provides the backbone for an enterprise-wide
information system. At the core of this enterprise software
is a central database which draws data from and feeds
data into modular applications that operate on a common
computing platform, thus standardizing business
processes and data definitions into a unified environment.
With an ERP system, data needs to be entered only
The system provides consistency and visibility or
transparency across the entire enterprise.
A primary benefit of ERP is easier access to
reliable, integrated information.
A related benefit is the elimination of redundant data
and the rationalization of processes, which result in
ERP Software Vendors
SAP AG-SAP stands for Systems, Applications and
Products in Data Processing.
SAP AG was founded in Germany in 1972 by five
engineers who wanted to produce integrated business
application software for the manufacturing enterprise.
Seven years later, the company launched its first
enterprise software, R/2, which was designed around a
centralized, mainframe-based database.
SAP’s client/software product, R/3, was introduced in
1992 and quickly came to dominate the ERP software
Some Other ERP Software
Supply Chain Management
Supply Chain Management (SCM) software
traditionally deals with five distinct processes:
plan, source, make, deliver, and return.
The SCM market is currently led by vendors who
provide solutions as one component of their product
portfolio, such as ERP vendors SAP, with its mySAP
SCM suite, and Oracle, which offers a series of SCM
Oracle in particular has grown its line with the
acquisition of PeopleSoft (and PeopleSoft acquisition
J.D. Edwards), as well as the Oracle Retail
offering, based on its purchase of Retek. Along with
Oracle Retail, the company also offers the Oracle E-
Business Suite SCM, PeopleSoft enterprise SCM, and
JD Edwards EnterpriseOne SCM suites. The space also
includes specialty vendors, whose core offerings are
i2 Technologies is the leading vendor in the pure-play
Enterprises selecting supply chain management tools
and applications should consider the following key
1. Systems Specifications
2. Electronic Collaboration Solutions
3. Process Integration
4. Interoperability/Ease of Integration
5. Standards Compliance
7. Customer Relationship Applications
8. Industry Focus/Vertical Markets
mySAP Supply Chain Management
SAP gained its reputation as a provider of robust, full-
featured ERP solutions for multi-national
companies, and it has gained the same reputation in the
As part of its mySAP Business Suite, mySAP SCM
segments its functions into categories of
planning, execution, coordination, and collaboration.
It also provides a set of supplier relationship and
execution capabilities, which combine to offer one of the
most comprehensive solutions in the market.
Oracle Supply Chain Management
Oracle has invested heavily in its applications suite
and its infrastructure.
It has complemented its ERP portfolio with a solid
supply chain management suite that satisfies planning
and execution capabilities, as well as a good CRM
portfolio and a strong vertical market focus that targets
the transportation, communications, consumer packaged
goods, high tech, manufacturing, and government
The company's SCM suite include products that are
designed to meet customers’ business needs around
five optimizations, which are:
1. Revenue and Profit Optimization.
2. Spend Optimization.
3. Production Optimization.
4. Fulfillment Optimization.
5. Logistics Optimization.
RFID = Radio Frequency Identification.
An ADC (Automated Data Collection) Technology that:
• uses radiofrequency waves to transfer data between a
reader and a movable item to identify, categorize, track..
• Is fast and does not require physical sight or contact
between reader/scanner and the tagged item.
• Performs the operation using low cost components.
• Attempts to provide unique identification and backend
integration that allows for wide range of applications.
Other ADC technologies: Bar codes, OCR.