Collaborative planning: supporting automated replenishment programs

Theodore P. Stank, Patricia J. Daugherty and Chad W. Autry

Business Process Management Journal

1999, Vol. 4, No. 2, p. 75-85

 

1)      Introduction

  1. a) ARP
  2. i) Inventory restocking is triggered by actual needs
  3. b) Collaborative forecasting
  4. i) Better match supply and demand
  5. ii) Better preparation for market changes

iii)     Long term forecasts are continually updated based on actual demand

2)      Collaborative planning, forecasting and replenishment

  1. a) Difficulties in forecasting
  2. i) Influence of promotions
  3. ii) Changing demand patterns

iii)     Competitive pressures

  1. b) Solutions to uncertainty
  2. i) Inventory: an expensive method of avoidance
  3. ii) Cooperative panning between trading partners
  4. c) What is CPFR
  5. i) Elimination of multiple forecasts through detailed exchange of information
  6. ii) Internal coordination and information sharing

iii)     Coordinating multiple forecasts and various information into a single forecast

  1. d) Benefits
  2. i) More effective inventory management
  3. ii) Improved customer service

iii)     Improved profitability

  1. e) Nine-step Model

(1)   Develop a front-end agreement

(2)   Create a joint business plan

(3)   Create a sales forecast

(4)   Identify exceptions for sales forecast

(5)   Resolve/collaborate on exception items

(6)   Create an Order forecast

(7)   Identify exceptions for order forecast

(8)   Resolve/collaborate on exception items

(9)   Order generation

3)      Impact of CPFR

  1. a) Reported results
  2. i) Improved in-stock positions
  3. ii) Achieved significant inventory reduction

iii)     Better asset utilization

  1. iv) Reduced risk
  2. v) Improved day-to-day management
  3. b) Limitations
  4. i) Business must have significant volume to justify investment
  5. ii) Requires significant technological support

4)      Research results

  1. a) A positive relationship between CPFR and process inputs, performance outcomes and IS tools used for implementation
  2. i) Demand fluctuations are smoothed by greater information sharing
  3. ii) Some reluctance to operate with low/no inventory
  4. b) A strong positive relationship between firms demonstrating high levels of CPFR and implementation of operating process changes
  5. c) There is little difference on performance goal attainment associated with high or low levels of CPFR implementation
  6. d) A positive association between CPFR implementation and IS capabilities

5)      Conclusions

  1. a) There are relatively high levels of process change, achievement of performance goals and IS capabilities among firms using ARP
  2. b) There is an association between IS capabilities and the implementation of CPFR
  3. c) True benefits are realized when collaborative plans are linked to operational change
  4. d) Accurate demand planning enables manufacturing to postpone the production of anticipatory stock
  5. e) Changes to processes are not easy or cheap
  6. f) Limitations of research
  7. i) Fails to verify broad based performance enhancements related to CPFR
  8. ii) Fails to consider potential differences in manufacturer and retailer perceptions of the impact of APR and CPFR