The benefits and challenges of Collaborative Planning, Forecasting, and Replenishment (CPFR) principles are discussed in a new report by AMR.
Experts predict that by 2004, the collaborative application market, including CPFR, will reach $540 million. In part, this growth will be driven by customizable applications with built-in workflow and optimization technologies. Collaboration and CPFR processes could be the key component to eBusiness strategy.
Nine steps to wisdom
Few retailer / supplier collaborative partnerships are even close to the nine steps of the Voluntary Interindustry Commerce Standards Association’s (VICS) approved CPFR process. Based on the current state of the market, it appears that broad adoption of CPFR technology is at least another two years away.
“CPFR is the first step toward developing a broader collaborative relationship between retailers and suppliers, “ said, Janet Suleski, senior analyst with AMR Research. “The bottom line is that the benefits of CPFR and collaboration far outweigh any initial investment of time and resources made to maintain these processes.”
According to the study, collaboration is a long-term strategy for most retailers striving to achieve competitive advantage through overall supply chain efficiency. CPFR streamlines the flow of physical goods to reduce distribution costs and supply chain inventory and improve in-stock positions and sales.
It also facilitates a number of intangible benefits between trading partners and suppliers including improved trust, increased collaboration in areas outside the scope of CPFR, and idea sharing.
Key survey results
Report findings are based on a detailed survey of VICs compliant retailers and consumer goods manufacturers on their current and future collaboration activities. Survey results indicate that long-term benefits of implementing CPFR will have a major impact on the bottom line. Survey data reveals:
• 80% of retailers and suppliers do not believe that CPFR is critical to their present e-business strategies, while 44% indicated that CPFR will be extremely important within the next two years.
• 45% of retailers and 47% of manufacturers expect to be capable of real-time collaborative data flows within two years.
• Retailers and manufacturers ranked replenishment management, product item maintenance, and CPFR as their top collaborative priorities.
AMR Research is a provider of research and analysis of eBusiness strategies and technologies, offering a comprehensive view of the processes fundamental to success in the new economy. Its research team analyzes the impact of technology on industry and understands how to align new technology with real business goals, industry by industry. The company also provides analysis, advice, and market data to software and services providers and members of the financial community.
The entire AMR Research Report: Beyond CPFR: Retail Collaboration Comes of Age, is available on the website.