Prior to today’s advanced cloud platforms, the prevailing strategy was to implement CPFR, or Collaborative Forecasting, Planning, and Replenishment. CPFR defines the flow as Creating the Sales Forecast, Creating the Order Forecast, Generating Orders, Executing Orders, and then gathering Replenishment feedback. As we all know this flow is necessary, but in today’s replenishment world just isn’t sufficient.
The new approach seeks to align and synchronize demand, supply, and product cycles, as well as enable the ability to sense and shape demand to make a profitable demand response. Focusing on a single view of the consumer for all members of the extended supply chain requires an approach that includes retailers, manufacturers, and logistics providers all connected across a multiparty execution backbone that orchestrates a coordinated response to the end-consumer’s demand signal. Logistics providers are in a unique position to be the key enabler of this multiparty execution backbone.
For example, when thinking about replenishment, Logistics providers can now provide the ability to optimize truckloads simultaneously with inventory using pull policies.
Using these types of pull-based inventory replenishment policies allows customers to reduce supply chain variability, optimize inventory levels and minimize freight expense. Typical measurements include inventory turns, truck utilization, and premium freight reduction. Unfortunately in order to provide this type of functionality most ERP type vendors must use plug-ins that are not integrated as part of the transactional flow. Thus this type of replenishment may be listed as a capability, but given the batch architecture just can’t be engaged on a real time, exception oriented basis which is what is required in today’s rapid replenishment environments.
n future posts, I’m going to continue to discuss some of the opportunities that LSPs have to add more value to their customers. If you’re impatient however, I suggest you read the new whitepaper “8 Opportunities for Today’s Logistics Providers“.