In a nutshell: CPFR – Collaborative Planning, Forecasting and Replenishment

CPFR is a supply chain concept from the retail sector. It aims to reduce the whip effect in the supply chain by exchanging all information from demand forecasting to replenishment at the various trade levels throughout the supply chain and jointly coordinating forecasts and replenishment quantities. The aim is to keep stocks in the supply chain as low as possible and avoid fluctuations in demand due to incorrect estimates of requirements at upstream planning stages.

Whip effect; © Public Domain
Whip effect; © Public Domain

However, CPFR requires trusting cooperation and communication between all parties involved, which is often not the case in retail, where there are major differences in market power between suppliers and customers.

Our tip: The opportunities that lie in the application of CPFR are considerable and worth the effort of everyone involved. The CPFR concept is not limited to trading. A CPFR should be sought between A-customers (from the supplier’s perspective) and A-suppliers (from the customer’s perspective), especially in industries and trading areas where cooperation between customer and supplier is on an equal footing.

Picture of Prof. Dr. Andreas Kemmner

Prof. Dr. Andreas Kemmner

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