Collaborative Planning, Forecasting And Replenishment

Collaborative Planning, Forecasting And Replenishment

1. Collaborative Planning, Forecasting And Replenishment GROUP : 03 Harishankar Sahu 0036 Vikas Sharma 0052 Vrinda Mathur 0053 Neha Bala 0041 Waseem Farooq 0048

2. CPFR (Collaborative Planning, Forecasting And Replenishment) Processes, technologies and the supporting System that allow continuous and automated exchange of information between trading partners. Through collaboration, suppliers and retailers can work together to fulfill consumer’s wishes better. Definition - A formal business process for value chain partners to coordinate plans in order to improve efficiencies and increase sales and service.

3. THREE MODES OF CPFR Basic CPFR: a limited number of business processes integrated between a limited number of supply chain partners Advanced CPFR deals beyond data exchanges to synchronise forecasting information systems and coordinate planning and replenishment processes Developed CPFR: involve a greater number of data exchanges between two partners, and may extend to suppliers taking responsibility for replenishment on behalf of their customer

4. To Identify major challenges with forecasting accuracy. Improve service levels and inventory optimization. Develop business plan . Requirments: before CPFR Evaluate Your Current State. Define Scope and Objectives. Prepare for Collaboration. Are Your Trading Partners Ready for CPFR? Develop a Business Case to take to your Partners Execute Performing the Pilot. When to Use CPFR?

5. 1. Front-End Agreement 2. Joint Business Plan 3. Create Sales Forecast 4. Identify exceptions 5. Resolve exceptions 6. Create Order Forecast 7. Identify exceptions 8. Resolve exceptions 9. Generate Order Once Qtr. Wk, Mo Wk, Mo Collaborative Planning Collaborative Forecasting Collaborative Replenishment Seller Buyer Sales Forecast Order Forecast CPFR PROCESS

6. 8 collaboration tasks form cycle of 4 activities. Each activity consists of two collaboration tasks. CPFR® REFERENCE MODEL

7. Establish the ground rules for the collaborative relationship. Determine product mix and placement, and develop event plans for the period. 1. STRATEGY & PLANNING

8. Setting the business goals and defining the scope for the relationship Assigning roles, responsibilities, checkpoints and escalation procedure. 1.1 Collaboration Arrangement 1.2 Joint Business Plan Trading partners exchange information on corporate strategies and business plans to develop a joint business plan. Identifies the significant events that affect supply and demand, such as promotions, inventory policy changes, store openings / closings, and product introductions.

9. Sales forecasting: Projects demand at the point of sale Order planning/forecasting: Determines future product order & delivery requirements based upon the sales forecast. Takes into account inventory positions, transit lead times, shipment quantities, and other factors. 2. DEMAND & SUPPLY MANAGEMENT

10. Place orders, prepare and deliver shipments, receive and stock product on retail shelves, record sales transactions and make payments.  Order generation — Transitions order forecasts into firm demand Order fulfillment — Producing, shipping, delivering, and stocking the products 3. EXECUTION

11. Monitor planning and execution activities for exception conditions Aggregate results, and calculate key performance metrics Share insights and adjust plans for continuously improved results 4. ANALYSIS

12. Trading partners calculate key performance metrics (e.g., in-stock level, forecast accuracy targets, etc.) To evaluate achievement of business goals, uncover trends, or develop alternative strategies; To share insights and adjust plans for continuous improvement. Generate and agree to a list of exception items for your CPFR initiative. Develop a process to resolve sales forecast exceptions. PERFORMANCE ASSESSMENT

13. Enhanced Relationship between Buyer and seller . Increse Sales. Improved profitability Improved Product Offering. Improved Order Forecast Accuracy. Inventory Reductions. Improved Technology ROI. Increased Customer Satisfaction. Improved Overall ROI CPFR BENEFITS :

14. CPFR® ROI BENEFIT CATEGORIES

15. A set of guidelines supported and published by the Voluntary Inter-industry Commerce Standards (VICS) Association Trading partners share their plans for future events, and then use an exception-based process to deal with changes or deviations from plans By working on issues before they occur, both partners have time to react A supplier can build inventory well in advance of receiving a promotional order and carry less safety stock at other times A retailer can alter the product mix to reduce the impact of supply problems THE CPFR® OPPORTUNITY

16. Superdrug operates more than 700 stores throughout the United Kingdom, offering its customers an average of more than 6,000 product lines with over 900 stores . Johnson & Johnson is a global American pharmaceutical, medical devices and consumer packaged goods manufacturer founded in 1886. Johnson & Johnsons brands include numerous household names of medications and first aid supplies . Challenges: Major challenge was related to trimming inventory so that it would more closely match sales. In addition, Superdrug wanted to improve forecast accuracy and looked forward to an improved relationship with their trading partner—in this pilot’s case, J&J. Super Drug and Johnson and Johnson Company in Brief :

17. Implementation: Superdrug chose J&J not only due to compatibility of systems, people and strategy, but most importantly, due to the similar culture of the two companies. Before launching the pilot, Super drug developed a clear blueprint of the trading partners’ roles and responsibilities to make sure that their own strategy and structure were aligned with the CPFR process. They also developed a detailed plan to capture both the benefits and the costs of the pilot. Superdrug began the pilot process in April 2000 and by May 2000 the front-end agreement and joint business plan were agreed to and signed between the two companies.

18. Benefits: • Many problems were avoided since Superdrug was able to highlight future issues and resolve them with their trading partner. • CPFR also gave Superdrug access for the first time to a range of previously unavailable data such as suppliers’ sales and order forecasts. • Superdrug also found that communications were improved with their supplier through the weekly conference call, which resulted in J&J’s profile within Superdrug being raised, and conversely, Superdrug’s profile was raised within J&J.

19. Measurable results: • 13 percent average reduction in Stock, at Superdrug’s distribution centre , for the lines that were collaborated on. • Warehouse availability increased by 1.6 percent. • Superdrug’s forecast accuracy, which they thought was good before the trial began, saw an improvement of 21 percent. • Superdrug also saw RDC cover (Present Stock On Hand/Last Week’s Sales) reduced by 23 percent for those J&J’s product lines that were subject to CPFR. Moreover, RDC cover during the pilot period increased by 11.8% for those product lines not subject to CPFR.

20. Procter & Gamble has operations in more than 140 countries with worldwide net sales greater than $78.9 billion. Procter & Gamble’s seven Global Business Units include baby care, beauty care, fabric & home care, feminine protection , food & beverage, health care, and tissues & towel. Procter & Gamble Objectives Procter & Gamble’s CPFR focus is to build on the current success of the Continuous Replenishment Program (CRP). P&G is deploying CPFR to enable creation and integration of consumer demand data The primary objective of these pilots is 100% product availability on the store shelf, while simultaneously reducing inventory requirements in the retail stores, customer distribution centers, and P&G plants.

21. Methodology The key understanding is that CPFR is not a technology. It is a process. To test and deploy new processes , CPFR pilot partners agreed to three core activities : Document and map the current supply chain processes for product and data flow . Assess the current CPFR capability. Create a joint action plan to address improvement opportunities . Supply Chain Lead-Time Mapping of Product and Data Flow All of the processes were mapped, and the time lag between processes and triggers was measured from the point that a package was scanned at retail to the point new product was replenished on the shelf. CPFR Capability Assessment – The CPFR Capability Assessment was developed and used in some pilots to assign a numeric value to each of the CPFR key processes. The actual scoring verified the understanding from the supply chain mapping, and directed the creation of a CPFR process improvement plan.

22. Joint Action Plans and Testing This step combined the first two steps into a test plan. It was documented and approved by the team sponsors , and the process improvement testing and documenting began. Historical POS data was collected on the test category (limited number of SKUs) and the POS data was continuously analyzed using actual orders and shipments Resources Involved P&G: Overall corporate champion/sponsorship team. 2 . CPFR Project Managers: Business and Technical 3. Customer Business Development Team: Sales Account Executive, Logistics, Systems and Retail Operations Managers. 4. Data Analysts: Two analysts for formatting and evaluating the 830 order forecasts and the POS datareceived separately. 5. Category Demand Planner

23. Learning and Results All CPFR pilots recognized the need for a partnership founded both on trust and on the ability and willingness to share information on processes and systems . A joint learning process would lead to understanding how to improve difficult-to-improve business results . It would not be a quick action to increase sales . The companies involved in the P&G pilots are all competitors within their respective marketplaces, yet have agreed to associate their involvement in the CPFR pilot with P&G. This demonstrates the importance that each company has placed on the value of CPFR to its future success. Once the processes are understood and institutionalized, a critical mass of partnership involvement between manufacturers and retail distributors will be essential .

24. CPFR is a great concept that has revolutionized business practices by integrating the organization with its trade partners more effectively to realize mutual benefits. Buyers benefit from reduced prices, better forecasting, collaborative relationships to get better service levels and synchronized operations. Conclusion