Thursday, August 21, 2008

Collaborative forecasting

There is another form of electronic commerce that promises to greatly increase the efficiency of the supply chain. It is called Collaborative Planning Forecasting & Replenishment (CPFR). CPFR involves a customer regularly notifying a supplier of his/her expected future needs of certain products.
Collaborative forecasting works to solve two of the greatest challenges faced by buyers and inventory managers:

* Stock outs of critical products
* Unneeded safety stock sitting on the shelf gathering dust

Of course there are many instances in which customers cannot predict their future product needs – but whenever they can, collaborative forecasting promises to increase productivity and profitability throughout the supply chain. Let's work to replace inventory with information.

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