Introduction
The CPFR model stands for collaborative planning, forecasting, and replenishment and refers to a model applied to improve supply chain management by enhancing coordination between trading partners. This model can be applied to add efficiency to various business processes. This paper will analyze how the CPFR model can enhance processes such as inventory control in relation to forecasting, service to the customer, and third-party logistics in terms of distribution operations.
Benefits of the CPFR Model
Inventory Forecasting
The first operation process that the CPFR model can make more efficient is inventory control concerning forecasting. The main objective of the model is to enhance collaboration between trading partners, which, in the case of inventory control, is reflected in joint planning and forecasting of demand (Nakano, 2019). More efficient inventory control is achieved through sharing information.
When participating sides mutually provide useful information, demand prediction can become more accurate. This way, stockouts can be prevented as the inventory levels are controlled by both partners (Nakano, 2019). When applying the CPFR models, partners also regularly monitor forecast accuracy, which can help identify areas that need improvement quickly.
Customer Service
The second process that the CPFR model can enhance is service to the customer. On the one hand, improving this process is related to more efficient inventory control. This is reflected in the fact that when the partners’ inventory levels are more controlled, they are also aligned with customer demand (Singhry & Abd Rahman, 2019). This helps ensure that the products the customers need are always available to them. Better demand forecast achieved through synchronized inventory control also helps to plan promotion and keep inventory at such levels that no excess is present (Nakano, 2019).
On the other hand, the coordination between partners also implies synchronized replenishment. This component of the model helps to avoid situations when the product is out of stock and is not available to the customer. The coordination between partners also reduces delivery times, as synchronized replenishment also helps to improve the speed of order fulfillment (Parsa et al., 2020). Finally, better partners’ cooperation implies more active problem-solving, which helps identify and solve issues before they impact customer service.
Third-Party Logistics
Third-party logistics (3PL) can also be improved using the CPFR model. To begin with, a better demand forecast allows the parties involved in logistics to make logistics operations more efficient (Nakano, 2019). Ensuring the right levels of inventory also contributes to improved logistics. Logistics also involves warehousing operations, which can be optimized by sharing data between the providers. This way, the carrying and inventory holding costs can be minimized (Nakano, 2019).
3PL providers can also improve order processing and shipping when there is transparency and coordination regarding inventory levels (Nakano, 2019). The model also helps to increase the overall supply chain visibility as the parties can track the goods’ movement continuously and quickly address any issues that can emerge in real time. Overall, the logistics process can be made more efficient with the help of the CPFR model.
Conclusion
In conclusion, the CPFR model is an important tool in supply chain management. It can help to achieve efficiency in many operational processes, including inventory control, customer service, and third-party logistics. CPFR helps to control inventory levels more efficiently, while demand forecasts are improved, and customer service is enhanced. In terms of third-party logistics, order processing, shipping, and other logistics aspects can be significantly enhanced by CPFR.
References
Nakano, M. (2019). Supply chain management: strategy and organization. Springer Nature Singapore.
Parsa, P., Shbool, M.A., Sattar, T., Rossetti, M.D., and Pohl, E.A. (2020). A Collaborative Planning Forecasting Replenishment (CPFR) Maturity Model. International Journal of Supply Chain Management, 9(6), 49-71. Web.
Singhry, H.B. and Abd Rahman, A. (2019). Enhancing supply chain performance through collaborative planning, forecasting, and replenishment. Business Process Management Journal, 25(4), 625-646. Web.