The supply chain fulcrum (i)
D
I
C
DP
Key
D :
DP:
I :
C :
Demand
Decision Point
Inventory
Capacity
1
The supply chain fulcrum (ii)
D
I
C
DP
Visibility and Velocity enable the fulcrum to be placed nearer
to Demand in order to reduce the need for inventory and/or
capacity.
2
Visibility and velocity drive responsiveness
Bottleneck
Management
Postponement
Simplification
Collaborative
Planning
Reduce nonvalue adding
time
Streamlined
processes
Close to
customers
Responsiveness
Velocity
Reduce
batch sizes
Reduce
in-bound
lead-times
Synchronous
Supply
Access to
real demand
Process
Management
Internal
Integration
Visibility
Shared
Information
Close to
suppliers
Strategic
Sourcing
Collaborative
Planning
Event
Management
3
The sales and operations planning process
Generate aggregate demand forecast
Modify forecast with demand
intelligence
Create a consensus forecast
Create ‘rough cut’ capacity plan
Execute at individual item (SKU)
level against demand
Measure performance
4
Benefits of CPFR
Reduce capital
invested
Optimise
production
•
Reduce storage
capacity
Inventory
Wastage
Benefits
•
Decrease Costs
Overtime
•
•
•
•
•
Transportation
cost
Increase
revenue
Better
availability
Improved
consumer
satisfaction
•
•
•
Higher utilisation of
production capacity
Greater supply chain
visibility allows inventory
and storage capacity
reduction
20-25% reduction
inventory carrying cost
Improved forecast accuracy
50% reduction in
unplanned overtime
Up to 500% ROI on
promotions
Reduced excess and
obsolete inventory
Reduction in lead time
Reduced out-of-stocks
Improved consumer
satisfaction ratings
5