Supply Chain Integration & CPFR

Supply Chain Integration & CPFR
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  • 0:00 What Is CPFR?
  • 1:00 How Can it Help the…
  • 2:09 CPFR for Consumers
  • 2:45 Setting up CPFR
  • 3:48 Lesson Summary
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Lesson Transcript
Instructor: Kevin Newton

Kevin has edited encyclopedias, taught middle and high school history, and has a master's degree in Islamic law.

Through a process known as CPFR, companies can link their supply chains with those of their suppliers, meaning that they get raw materials faster and in a more timely manner. Learn about this process and its benefits to business.

What Is CPFR?

Imagine that you are the purchasing officer for a small chain of department stores, selling everything from home wares to shoes to clothes. Needless to say, you've got a wide assortment of suppliers that you have to purchase various goods from, and it's sometimes difficult to balance all the orders that you have to put in to them. Wouldn't it be nice if they could just predict what you needed and have the shipments ready to go? Not only would that save time in processing, but it would make your job as a purchaser much easier. Luckily, just such a system exists.

It is called collaborative planning, forecasting, and replenishment, or CPFR for short. This allows suppliers, companies, and even customers to link their supply chains into one long strand. In this lesson, we'll look at how CPFR works, learn how to set up a CPFR agreement with suppliers, and see how CPFR is starting to become common even for consumers.

How Can it Help the Supply Chain?

Think about your existing supply chain. It starts with your suppliers and ends with your customers. However, do you really know what exists on the other side of that 'supplier' label? Chances are you don't. CPFR not only lets you know what is on the other side, but it also links your supply chains together. Let's think about it like this. Imagine that you and your supplier's supply chains are two roads separated by a river. In the past, you had to offload your goods and use a boat to get between the two roads. However, CPFR builds a bridge that allows for goods to move faster.

It's not just speed. Remember, CPFR is about forecasting and planning, too. Because you're sharing your predictions about what you'll need and when you'll need it with your supplier, you are reducing their uncertainty. Suppliers know they'll have to have certain goods to you by a certain time and at a certain location. There's no more waiting around for orders to come in and be processed. Instead of running out of a particular size shoe or type of plate, your suppliers can see exactly when you are running low and prepare a shipment.

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