The document discusses collaborative planning, forecasting and replenishment (CPFR). CPFR is a business practice where trading partners share intelligence to plan and fulfill customer demand. It links sales, marketing, supply chain planning and execution. The objective is to increase customer availability while reducing inventory, transportation and logistics costs. CPFR involves sharing data like forecasts, inventory levels, production plans to improve coordination between retailers and manufacturers. Benefits include reduced out-of-stocks, higher order fill rates, improved forecast accuracy and inventory turns.

1. Full form is collaborative planning ,
forecasting and replenishment ( CPFR)
CPFR is a business practice that
combines the intelligence of multiple
trading partners in the planning and
fulfillment of customer demand.
It links sales and marketing best
practices to supply chain planning and
execution processes.
Objective is to increase availability to the
customer while reducing inventory
,transportation and logistics costs.

2.  Cpfr HAS ITS ORIGINS IN EFFICIENT
CONSUMER RESPONSE ( ECR)
 ECR was a conscious attempt to better
coordinate marketing, production and
replenishment activities in a way that
simultaneously increased value to the
consumer while improving supply chain
performance for producers and retailers.

3.  Earlier to cpfr Relationships between retailer
and manufacturer were without any planning
.The lack of information sharing made these
relationships more costly than they needed to
be ( unpredictable ordering patterns , excessive
inventories , service failures..)

4.  Origin :it began as a initaitive in 1995 co – led by Wal –
mart and P & G
 Core elements :
 Efficient assortment : product offering should be rationalised to
better meet customer needs and improve supply chain
performance ( ex- why 100 different SKU’s that confuse
consumers when 30 SKU’s would meet their needs)
 Efficient production introductions – new products should be
introduced in response to real customer needs and only after the
impact on supply chain performance has been considered.
 Efficient replenishment – all physical and information flows that
link producers to the consumers should be streamlined to cut
costs and increase value.

5.  CPFR extends the business processes to
include :
 Information systems for capturing and transferring
POS , inventory, and other demand & supply
information between trading partners.
 Feedback systems to monitor and improve supply
chain performance.
 CPFR PUT PROCESSES IN PLACE TO HANDLE THE
ADDED COMPLEXITY.

6.  FEATURES:
 It is a collaborative inventory management system in which
a retailer shares information with vendors.
 CPFR generates exception reports that spit out unusual
sales patterns.Then when authorised by both the retailer
and vendor, the computer makes automatic changes in the
amount of merchandise going to the stores or distribution
centre based on the changes in the forecasting plan.
 The data in the CPFR system can be concentrated into a
common pool that can be accessed by multiple vendors, as
well as by multiple users within the retail chain, including
the retailers transportation specialists, buyers ,
merchandisers , logistics and store operations people.

7.  BENEFITS:
 It benefits both retailers and their vendors.
 Because parties are working together with
sophisticated forecasting and inventory management
software,sales and gross margin increase and in- store
inventory levels is maintained at optimum level,
resulting in a higher GMROI.
 As the forecast is accurate so fill rate ( the % of an
order that is shipped by the vendor) increases.
 High Fill rate means that in store merchandise
availability increases. so lesser stock –out situation.

8.  TO INCREASE ON SHELF AVAILABILITY WHILE
LOWERING INVENTORY THROUGHOUT THE
SUPPLY CHAIN

9.  Methodology was developed by voluntry interindustry
commerce standards or VICS ( www.vics.org) a U.S.
organisation, and adopted by ECR Europe(
www.ecrnet.org). This methodology comprises a nine –
step process designed for planning , forecasting and
replenishment of retail inventory by enhancing
coordination of all trading parties in a supply chain.
 It centers on the sharing of the following data: business
plans, promotion plans, new- product plans, inventory
data, POS data, production and capacity plans and lead-
time information.

10.  It has been recently adopted and stores ( like
procter & gamble, wal – mart , pillow tex ,kmart
) have reported benefits such as reduced out –
of – stocks , higher order – fill , improved
forecast accuracy , higher inventory turn –
overs..

11.  Category management is a process of managing categories
as strategic business units, producing enhanced business
results by focusing on delivering value to the customer.
 How this to be achieved ??? This can be achieved by
optimizing new product introductions, enhancing repeat
purchases , and increasing the turn around of the
merchandise.
 The category management process involves certain strategic
and operational decisions.
 Main components are discussed in next slide::;

12. Category defination
Strategic
decision
Category roles
Category strategies
Category tactics
Operational Managing category
decision mix
Assessment and
feedback

13.  Category definition is the first step in the
category management process.
 Category is defined and the product
assortment is determined from the consumer
perspective.
 The category definition leads to the formation
of departments and sections in the store.

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15.  It illustrates how retailers can use their understanding of
the consumer’s definition of the category and its
structure to build a product assortment.
 For this retailers need to understand the way consumers
organise product forms,price options ,sizes and brands
when they buy and use the category.
 This yields a specific name for the category in light of
the benefit or solution sought by consumers.
 It provides clustering of the product and their SKU’s that
belong to the category.
 Retailers can draw the decision tree of the consumers
based on their choice patterns.

16. THE LEVEL TO WHICH THE RETAILER NEEDS TO
DEFINE ITS CATEGORIES DEPENDS ON THE
EXTENT OF CONTROL IT WISHES TO EXERCISE
AND THE LEVEL AFTER WHICH THE DIFFERENCES
IN BEHAVIOUR OF CUSTOMERS BECOME
INSIGNIFICANT.
THE RETAILER CAN COLLECT INFORMATION ON
EACH SKU.
A RETAILER WOULD STOP AT A LEVEL BEYOND
WHICH THE DEFINATION BECOMES MEANINGLESS
IN TAKING MERCHANDISE DECISIONS

17.  Assigning roles to categories :
 Each category , as defined in the first step, needs to be
assigned specific and strategic roles.
 The roles are derived after comparing the categories in the
light of customers , competition and retailer’s objectives .
 By focusing on the roles, retailers develop strategies that
would utilize resources efficiently. Category roles are
developed with the consumer in mind and reflect typical
consumer shopping behavior.
 It enables retailers to understand why competitors are doing
better or worse
 This enables retailers to reallocate its resources across
categories to improve its overall market position.

18.  Categories are assigned roles based on the
purchase behavior of the consumers.
 Two variables that may be taken into consideration
for assigning roles are
 1) the penetration of the category in the market
 2)the frequency of purchase
 This
yields a classification that can be used for
developing strategies.

19.  As seen in the figure this methods can be used
To classify product roles as staples , niches, variety
enhancers and fill – ins and adequate strategies
cab be developed accordingly .
High
staples niches
frequency of
purchase
Low Variety
Fill- ins
frequency of enhancers
purchase
High penetration Low penetration