A Historical Perspective Sets the Stage

Newer methods of vendor-managed inventories (VMI) and jointly managed inventories 0MI) are offsprings of this effort. But in all cases, the focus is placed on meeting customer demand by improving the processes and methods used to plan production and manage inventories between 

Given this background, we believe CPFR has application beyond its root intentions for retailers and their manufacturers. In this chapter, we investigate the phenomenon known as CPFR and explain why, after more than half a decade, firms are still struggling to reap the benefits of this powerful tool. Special assistance with the chapter was received from Chuck Troyer, partner at CSC Consulting, and we express out sincere thanks to him for his help. 

If a retail firm follows the VICS guidelines and succeeds in working with key suppliers to apply the concepts, we have noted that substantial opportunities can develop. There have been sufficient studies, pilots, actual implementations, and documented results to prove the validity of the inherent concepts. Among the leading possibilities are  

Improving revenues through elimination of lost sales caused by a mismatch between demand and supply at the time a consumer is ready to make a purchase. Several studies have shown sales increases of 7% or more when suppliers and retailers work together to have product available at the time of demand, particularly for jointly developed promotional events. 

Reducing the need for inventories and safety stocks as the vagaries of supply chain uncertainty are reduced and online visibility to what is happening in the chain introduces the ability to move goods to the most urgent point of need. Sharing of actual retail point-of-sale (POS) information with manufacturers and suppliers lessens the uncertainty and enhances the forecast accuracy involved in joint 

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