Has your organization been struggling to deliver a consistent fill rate to your client or service level to your client’s customers? Has it been challenging for your company to keep decent inventory coverage or maintaining satisfying forecast accuracy? If you answered yes to one of these questions, it might be time for your corporation to rethink some aspects of your supply chain.
What Is CPFR?
In today’s competitive market, it is more and more difficult (if not almost impossible) to gain efficiencies and improve demand response for companies working in silos. One of the key enablers of efficiencies and improvements across supply chains is to create and use collaborative planning, forecasting and replenishment (CPFR) strategies across organizations’ boundaries. CPFR strategies allow aligning of multiple S&OP processes and jointly plan supply chain activities to ensure that the joint business plans between organizations are respected, while minimizing costs and maximizing efficiency from end-to-end of your supply chain.
Collaboration is a journey; it is built step by step. It requires a significant investment of time and resources. Each client has a different mission, organisational structure, targets, objectives and so forth. There is no “one size fits all” solution; collaboration has to be adapted and tailor made for each major customer. Hence, the first step is to identify for which customers the return on investment will be the greatest. The client needs to have a collaborative mindset, an open mind and represent a significant percentage of your total turnover.
CPFR Is Collaborative By Nature
Secondly, you need to determine which individual in your organization has the right skills and knowledge to build such an important project. This person needs outstanding client facing and PR skills while having a great and extended knowledge of internal processes, systems, business opportunities and a great sense of the “big picture”. To kick off the CPFR project, the objectives, priorities and expectations of both parties need to be discussed, defined and agreed. Furthermore, the customer’s processes, systems and operational rules have to be mapped and completely understood.
Subsequently, the collaboration project leader has to realise a quick “win-win” in order to gain the trust and build relationship with the customer’s organisation. I can’t stress enough the importance of relationship and trust for successful CPFR. Afterwards, joint key performance indicators need to be established. Collaborative companies need to agree on SMART objectives (Specific, Measurable, Attainable, Realistic or Relevant and Time based). A target for each KPI has to be determined. I highly recommend creating a weekly scorecard or dashboard displaying all the KPI to track and monitor. This dashboard has to be shared between all stakeholders of both corporations. It is very useful to monitor KPI, identify opportunities and keep everybody informed of the project’s progress. Corrective actions need to be taken to improve results and tackle the different challenges and opportunities.
If you are able find the right balance of all these ingredients, using the right resources in the right time, your organization will definitely become the best in class supplier for your customer! CPFR strategies are great tools to make your supply chain a competitive advantage in today’s market!
Customer Supply Chain Manager