Joint forecasting

CPFR is in effect an extension of VMI in that it takes the idea of collaboration amongst supply chain partners a step further. Underpinning CPFR is the creation of an agreed framework for how information will be shared between partners and how decisions on replenishment will be taken. A key element of CPFR is the generation of a joint forecast which is agreed and signed off by both the supplier and the customer. 

Both Sandra s and Bill s teams produce a joint forecast of demand over the next six months, as shown in Table 9-7. 

Our firm and supply chain partners use lOS for joint forecasting, planning, and execution... 

Aviv, Y. 2002. Gaining benefits from joint forecasting and replenishment processes the case of auto-correlated demand. Manufacturing Service Operations Management 4(1) 56-74. 

GHK International, Diamond, M. L., et al (2003) Forecast and analysis of urban development in the Great Lakes Basin. Prepared for Scientific Subcommittee of the International Joint Commission, GHK International. 

Allwine, K.J., Leach, M.J., Stockham, L.W.. Shinn. J.S., Hosker, R.P, Bowers, J.F., Pace, J.C., 2004. Overview of Joint Urban 2003 An Atmospheric Dispersion Study on Oklahoma City, preprints, Symposium on Planning. Nowcasting and Forecasting in the Urban Zone, American Meteorological Society. Seattle, WA. 

Step 3 - Create Sales Forecast. In this step, retailer point of sale (POS) data, causal information, and information on planned events are used to create a sales forecast that supports the joint business plan. Table 4.3 describes that in scenarios A, B, and C, this step is carried out by the retailer/distributor (or buyer), and in Scenario D, the manufacturer (or seller) is responsible for creating the sales forecast. 

Step 4 - Identify Exceptions for Sales Forecast. This step identifies the items that fall outside the sales forecast constraints set jointly by the manufacturer and distributor. (The exception criteria for each item are agreed to in the Front-end agreement). 

Step 6 - Create Order Forecast. In this step, POS data, causal information, and inventory strategies are combined to generate a specific order forecast that supports the shared sales forecast and the joint business plan. Actual volume numbers are time-phased and reflect inventory objectives by product and receiving location. The short-term portion of the forecast is used for order generation, while the longer-term portion is used for planning. 

Joint sales and orders forecasts are created and internally integrated into production and replenishment planning systems. 

Some firms are using Advanced Planning and Scheduling (APS) software to aid their collaborative communication. This is a trend that is just starting, but it may develop into a set of methods by which supply chain partners could have joint sales forecasts and/or production plans in which a revision by one partner would be immediately transmitted to the next partner. 

The terms and Ef stand for the forecast errors of the retailer s and the supplier s estimates of their lead-time demand. We are particularly interested in the lagged forecast errors i.e., that made by the supplier during a particular period, and that made by the retailer r periods later. Proposition 15 tells us that the cost performance of the supply chain is uniquely determined by the safety stock parameters 7 and 7, and by the characteristics of the joint distribution of the lagged forecasts E] and which is described in the next theorem. 

Koloszyc, G. 1998. Retailers, suppliers push joint sales forecasting. Stores, June. 

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