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Today, the economy is globalized and companies develop markets on several continents. The quality of the goods delivered, delivery times, tracking of goods and service quality are priorities today that customers demand in markets increasingly competitive.
To accompany these changes in the economy where cost reduction plays an essential role and to meet final consumers becoming more demanding in terms of product availability and renewal of the ranges, the logistic function is a leader in corporate strategy.
In this new context, it is no longer truly global logistics, but "Supply Chain Management". This is indeed the know how to control and manage flow of information and goods between companies, that is to say from client to client to the supplier's supplier.
Flow management seems more and more complex, but it may however rely nowadays on new technologies and information systems better developed better and more efficient.
So many possibilities for companies is thus offer to find axes improvement, in order to draw benefits in the long term. One such solution is the concept of CPFR - Collaborative Planning Forecasting and Replenishment, based on close collaboration between all actors in the supply chain. This model allows indeed assume that a close relationship, especially between the distributor and supplier planning and sales forecasting, allows to anticipate possible deviations or changes in demand.
The main objective of this thesis will therefore focus not only on the presentation, but primarily on the analysis of this strategy.
We will see that such cost reduction remains the predominant motive to explain the choice of companies to work closely with their trading partners. However, it is not the only criterion. In addition, the risks associated with a strategy of CPFR are real and success is no guarantee. In this context, it seems particularly interesting to wonder about the conditions ensuring the profitability of CPFR strategies How to choose one or several business partners? What role does trust plays? How new technologies impacting on success or failure of a CPFR organization? These are questions that we tried to answer in this thesis.
This work will be finally completed by a reflection on the future of CPFR practices. SÂ´imposera-t-il à terme comme un concept incontournable dans le secteur de la grande distribution aux Etats-Unis et en Europe ou représente t-il au, contraire, un phénomène de mode qui risquerait de s'estomper prochainement ?
In our first part, we will present the overall reasons for development of a collaborative logistic between manufacturers and distributors.
In the second part, we will see the benefits and risks associated with such strategy.
In the third part, we will analyze the factors that make a CPFR organization profitable.
Finally, in the last part, we will focus on its future and to new strategies for collaborative logistics of tomorrow.
The origin and the reasons for developing a collaborative logistics between industrials and distributors
Before presenting and developing our subject in depth, it seems essential to define a number of terms and explain concepts first, to better develop the subject and the problem addressed in this thesis. This first part will therefore have as main objective to explain the need and the current development of a collaborative supply between manufacturers and retailers. For this, we will talk about first the concept of supply chain management, as well as its current limitations, before submitting in a second time the various forms of collaborative logistics including the CPFR (Collaborative Planning Forecasting Replenishment) which is the central subject of this thesis.
A/ Supply Chain Management
In general, the Supply Chain Management can be defined as the overall management of the supply chain. It consists of taking into consideration all the links in the chain and their specificity, to better manage the allocation and use of resources. In addition, it also has a very important role in coordinating and managing all the information among different actors.
The concept of Supply Chain Management has emerged in France in 1996. This terminology is also closely linked to the emergence of software publishers APS (Advanced Planning & Scheduling System). Indeed, to promote their management tools providing opportunities for coordinated management of multiple actors in a distribution channel, they promoted the idea of â€‹â€‹an extended supply, integrated called supply chain.
Development of Supply Chain Management reveals two important phenomena that distinguish it from the logistics:
- First, the vision of the logistician is the vision of the company to which it belongs. Therefore, even if he is interested in the different flow between his company and its suppliers, it does not go beyond.
The concept of Supply Chain Management (SCM) goes much further. It is indeed focused on the idea that we should look at the entire chain from the first supplier to final consumer, to increase the overall logistics performance. In other words, SCM pushes to transcend the fragmentary approach of the logistics, limited to synchronization of flows in a given enterprise.
- Secondly, the term "supply" puts the customer and end consumer in the heart of concern. This means that the flow management should be organized so that it will help to "supply" at best the end consumer. Thus, SCM, helped by new computer technologies of APS (Advanced Planning System) and ERP (Enterprise Resources Planning) that we will explain later, results of tender flows downstream to upstream and not more than the push from upstream to downstream.
2. The Supply Chain Management: a multi-level approach of management flows
As mentioned above, the supply chain approach can now exceed the limits of a single company to capture the total flow from supplier to customer's customer. This is one of the key features that distinguish the Supply Chain Management from simple logistical approach.
It is also important to know that the supply chain includes three kinds of flow:
Â· The physical flow of goods
Â· The flow of information
Â· The financial flows
In addition, it operates and acts on three levels:
Â· The control logic such as planning, response
Â· The permanent reorganization to adapt solutions from various and changing constraints
The table below allows us to better understand and diagram perfectly the difference between SCM and logistics as well as their various fields of application.
Fields covered by the logistics and Supply Chain Management
B/ The evolution of the supply chain
If we analyze the economic and business activities in recent years, we see that they have changed dramatically, influencing and therefore directly modifying the supply chain. This section will be devoted entirely to discuss the major changes in terms of business strategies.
In general, the economic situation has changed dramatically in recent years. Indeed, financial markets have been and have known successively explosions and collapse of stock prices. In addition, the financial situation of companies is not stable. It is not uncommon to see companies posting record profits and few months later should announce bankruptcy. In addition, the industrial activities and services are no longer limited to national territory, thanks to the opening of borders. On the contrary, companies today operate globally with manufacturing facilities located in far countries from the places of consumption; moreover headquarters and subsidiaries are located all around the world. This image is increasingly common these days. For reasons of cost, but also a desire to focus on the core business, companies outsource and relocate some of their activities to countries where labor costs are lower.
2. Information systems and communication
Progress in information systems and communication has greatly helped and participated in the evolution of business strategy. Indeed, thanks to their strong growth, this technology has become quickly accessible to all economic sectors. Their use has greatly enabled the reduce workflow and achieve a net gain in productivity. It is obvious that their appearances have also changed the supply chain, since, through this occurs the management of physical flows, but also of information between the various links in the chain. Nowadays, information is collected and redistributed through management software called ERP (Enterprise Resource Planning). They have many interests for companies who wish to equip, including uniqueness to the database of the company, reducing time-to-market of products, reduction of costs.
The evolution of data processing technology is a key factor for more information more sharing with the different departments within the same company, more integration and flexibility, which explains the growing popularity of ERP with business.
In addition, to be faster and more efficient with the flow of information when passing orders, businesses communicate through EDI (Electronic Data Interchange), allowing therefore a paperless purchase orders and invoices. Later on, EDI will probably replace placing orders through fax for security reasons and speediness of information exchange.
3. End consumers increasingly demanding
As we will see throughout this first part, trend of consumption have changed dramatically in recent years. Final consumers want nowadays find the desired product as quickly as possible and at the best price. If we add to this that final consumer has become volatile and demanding, we can deduce that distributors have more and more difficulties to build customer loyalty. Nevertheless, the current consumer takes time to compare the quality and price, which suggests to us that customers are now shopping in different stores based on product lines, variety, price and service offered. In other words, while the final consumer was a few years ago still very loyal and attached to the brand, today he has no remorse to change of brands and distributor.
As such, logistics plays an important role. Indeed, the client is only confronted with logistics when a problem occurs (problem of quality or out of stock).
When a link in the chain fails, the consumer is dissatisfied very quickly. Logistics is becoming indispensable link trying to build customer loyalty and enhance the product offering with a range of more advanced services: faster delivery, computerized monitoring of flows, reduced time-delivery orders, customizing conditions packaging and transportation and after-sales service.
4. The passage of a push system flow to a pull system flow
Until the late twentieth century, the flow within the supply chain was dominated by a push system flow, since in post-war demand was much greater than the supply. The term "push" means that the components, intermediate products and finished products are pushed into the stock following a production order, decided on the basis of numerical forecast and not due to an actual and identified need. In other words, in this system, a company decides to launch the production of a product without doing market research first to see if that product meets a market need or not. This organization has the advantage of creating economies of scale and an opportunity to plan production in advance. However, the main risk is that the client is interested anymore for product and the producer and the distributor are left with high inventories for this product range. This situation can be explained by the fact that there is no communication between the purchase department and sales department to determine and forecast the needs of end users.
The problem becomes more serious if the producer wants to increase the supply of its products. These significant quantities must then be sold through multiple distribution channels. However, due to limited capacity of distribution to sell significant stocks of product, distributors will lower prices through promotions, thereby causing an increase in demand. This way of operation will result in a steady decrease in price as promotions and therefore margins for the producer and the distributor. In addition, consumers will be increasingly tempted to wait promotional offers to buy certain products.
Nowadays, the situation has changed slightly. The end customer has become volatile, unfaithful to the brand expert and therefore has high expectations in terms of quality and availability of products. Today it is a pull system that dominates within the supply chain. In this type of strategy it is the final customer, who first triggers the production and flow resulting from an order, so it is this latest that makes the flow across the company, from downstream position to upstream position. In this case, the needs and buying behavior of final consumers are indeed at the heart of considerations. Demand is determined here thanks to accurate market research. This principle is also at the heart of collaborative logistics strategy and ECR (Efficient Consumer Response), which will be developed in the following sections.
The figure below illustrates the two different types of flows and allows to better understand the differences.
Differences between pull flow and push flow
C / Disruption Factors of Supply Chain Management
After explaining the general Supply Chain Management, it seems now particularly interesting to discuss its evolution, current constraints but also the elements that disrupt and undermine its operation. Factors that we will discuss now also deliver indications explaining its progress towards collaborative logistics.
Destabilization of the upstream flow
As we saw in the previous section, the globalization triggers effects that cause a number of impacts on the supply chain. Thus, the emergence of some countries has led companies to expand production facilities in foreign countries. Logically, this increase in production units mechanically generates needs of globalization also in distribution. But as we will see in this section, if this is compounded by specialization and outsourcing of factories, logistics and Supply Chain Management find themselves unbalanced and it is therefore necessary to find a more suitable flow to their efficient movement.
In this regard, three major industrial strategies can be identified for their impact on the redesign of a logistic model.
Relocation of production units
Relocation is a phenomenon that has affected many sectors of industry and services. At first glance, it seems primarily motivated by the existence of differential costs of labor between certain countries in the world that have yet the capacity and skills comparable production. However, the cost of labor is not the only variable that explains the relocation. Indeed, the geographical proximity of a booming economic zone in Asia could justify outsourcing in countries of Southeast Asia.
However, the geographical areas of production do not always coincide in most cases with areas of consumption, which creates logistical problems since the products manufactured must be returned to countries where markets exist. Since these logistical costs of repatriation of products on consumer markets generally represent an additional cost compared to a solution of national production, it must therefore be deducted from the sub-cost labor force generated by relocation. In other words, capital work in progress due to transport, transport by sea and air, fees or customs duties at the input is applied towards savings in labor costs. Logisticians therefore seek to minimize the costs of repositioning products to consumer markets, since outsourcing strategy is mainly useful if:
(Sub-labor costs)> (extra-cost logistics)
Therefore, the continuous evolution of the parameters that determine the components of this formula necessitates the mobility of industrial units to maintain the benefits originally perceived. In addition, the relocation of production has made traffic flow between the more complex production unit and the center of consumption, requiring an additional need for leadership, running and coordination.
Specialization of production units
The second industrial strategy that has disrupted the supply chain management is the concentration of production, partly due to a specialization of manufacturing units. Since the early 80s, the problem of successfully reconciling flexibility and productivity is real. Face to clients increasingly difficult to retain, factories are solicited by a very creative marketing that leads to a hyper segmentation markets and thus to answer more and more personalized in terms of product. This consequently leads to a multiplication of references to produce and an increase in the change of production runs. Compatibility with maintaining productivity needed to optimize the cost is not so obvious. To achieve this, some companies have decided the specialization of their production units to solve these problems.
This specialization, including worldwide, has certain advantages and is likely to provide especially the following savings to the producer:
Â· Economies of scale by concentrating production on a few specialized sites;
Â· Effects of experience on productions.
According to the principle of specialization of production units, one product was therefore intended to be manufactured in a limited number of plants (one or two at most).
However, this new strategy generates two main consequences in terms of logistics.
First, the fact that the products sold in a country cannot only come from factories in the same country as the non-versatile plants involves delivery of products required local trade from other foreign plants.
The second consequence of the specialization of production units is the preservation of the ability of firms that have globalized their production to continue to adapt themselves to the distinctiveness of local markets. To do so, the companies concerned choose to adapt their products locally downstream of their plants on logistics sites based in the heart local markets. In this case we speak of "post-manufacturing" or "delayed differentiation"
Destabilization of the downstream flow
After analyzing the destabilization of the upstream flow of the supply chain, we will now dedicate ourselves to the destabilization of downstream of logistics of producers and distributors.
The consequences of the laws Raffarin and Galland in France
Raffarin law in July 1996 completes the Royer Law of 1973. Royer law requires a permit implantation of a hypermarket bigger than 1000 mÂ² to slow the expansion of supermarkets in order to protect small businesses. Raffarin law aims to lowers the threshold to 300 m2 for permits to slow the rise of hard discount stores in urban areas. These laws have had a significant impact on the large distribution in France. Indeed, it had to seek expansion abroad and review the use of its stores. Formerly stocks (reserve) occupied very important place in the store almost half of the store, in order to anticipate any risk in case of out of stock. They have since been almost eliminated to be converted into retail space. To overcome this lack of space, retailers seek to build warehouses not far from the place of sale. The store replenishment mode has been changed.
Galland law in July 1996 prohibits resale at a loss sometimes used by retailers. To face this constraint, retailers have had to adopt new strategies. Admittedly, in some cases, large retailers wanted to increase its selling prices. However, this type of strategy is difficult to accept by final consumers, retailers were forced to find a way to reduce cost and to do so act on purchasing price and reduce logistics costs. This is particularly why we have seen the emergence of sourcing, that is to say, the search for cheaper suppliers around the world, and secondly we have seen that a new logistics strategy between distributors and industrial has appeared as close relationship collaborations.
Changes in distribution channels and supply chain impacts
Concerns of a producer are not limited to the simple manufacture of its products or the design of a service. Indeed, the provision of this product or service to the final customer, that is to say the distribution is a fundamental element of industrial strategy. However, circuits or channels distribution are nowadays more complex and may involve many intermediaries. Indeed, for the in-store sales by a retailer or distributor, several actors are likely to occur:
Â· The manufacturer himself;
Â· One or more wholesalers;
Â· The store, the last link in the chain before the consumer.
Therefore, it is possible to distinguish several types of channels:
Â· The direct channel: directly from producer to consumer;
Â· The short-channel: use the dealer as an intermediary between the producer and the consumer;
Â· The long channel: use a wholesaler and distributor as intermediaries between the producer and the consumer.
Transport is one of the fundamental operations performed on a channel distribution, it is clear that the choice of channel will have a direct impact on logistics costs. In fact, the more channel will be longer, the more handling operations (loading and unloading trucks) and storage will be longer as well due to many operations. This is why manufacturers are now seeking ways to optimize their transportation costs thanks to collective shipment of operations, which is to gather in a single vehicle several batches of finished products of the same destination, but of a different nature.
The consequences of the evolution of the final consumer behavior on the distributors trade policy
As we noted in the previous section of this chapter, the final consumer behavior has changed significantly in recent years. Indeed, it has become volatile, unfaithful to the brand and better informed. In addition, it will now be recognized as being unique in a society where the environment contributes to standardization. To cope with this desire for recognition, retailers now opt for a strategy of differentiation and loyalty but also a much more customer-oriented strategy rather than on the product, as it was the case in the past. Therefore trade policies distributors have been changed:
Reduction of life products
In an effort of differentiation, distributors have chosen to greatly reduce the product cycle life and adopt the pace of technology renewal. Obviously, this strategy has the effect of greatly reducing the "time to market" that is to say, the time required for the development and the finalize phase of a project until it can be run on the market. In addition, reducing the life of the product requires continuous adaptation of the supply chain to the phase of the commercial life of the product.
Large food industries are faced with the explosion in the number of items pushed by the competition between manufacturers. A distributor as "Metro" is now facing more than 100 new products per day. This is explained in particular by the introduction of new brands of existing products, with new types of packaging and new varieties of existing products. So, market segmentation and the profusion of references are an answer to the needs of specialized products for consumers.
In addition, the emergence and success of private labels (PLs) allow retailers to develop their own image and secure the loyalty of consumers on the entire range especially if they like the product.
The final consumer face to a failure of stock
As mentioned above, the final consumer is becoming better informed about the quality and nature of products. It is therefore not surprising to see a decrease in the impulse buy, which therefore tends to increase the sensitivity of the consumer face to an out of stock in store.
Face to an out of stock in store, it will have several alternatives:
Â· Seek the assistance of a salesperson;
Â· Store change: this is generally the case for more than 40% of consumers. Obviously, this number will vary depending on the nature of the object and the client's motivation;
Â· Wait for replenishment;
Â· Change brands;
Â· Change the type of product;
Â· Change of packaging in the same brand.
The risk of an out of stock is very common in the distribution sector, especially Saturday afternoon where it can reach nearly 16% for some references. As we will see in the next section, it is only through close cooperation between the different actors in the supply chain that the rate of out of stock can be greatly reduced.
Prospective on the new destabilizing trends of downstream
Mainly due to an increase in competition, large food industry should logically continue to evolve its strategies and therefore it will also generate new constraints on logistics on the relationship producer / distributor.
According to the authors Dornier and Fender it is possible to evoke five major trends that should lead supply chains to evolve in the future for this type of product.
The first evolution according to them would change the pace of replenishment. Indeed, the idea will be the evolution of a daily order in the best cases, large retailers would move towards multi-day orders. Logistics solutions from producers are therefore to imagine offering this type of service, knowing that the limit of time required between commands is nowadays a big problem.
The second trend is to transmit in real-time the level of sales in real-time to the producer, to establish an automatic replenishment.
Third, the distributor should move towards the establishment of virtual promotions. At the present time, and to highlight their products, producers are obliged to change the appearance (on-pack, sample, additional quantities ...). Eventually, the dealer should be able to perform on behalf of the producer in-store promotions which would be made automatically during checkout. In this system, the post-manufacturing operations which producers must deliver will be greatly reduced.
The fourth trend should focus on merchandising. Indeed, the linear setting must adapt to the nature of sales which varies greatly depending on the day of the week. To optimize the rotation of linear and turnover realized, it seems necessary to adapt the "facing" of the linear and therefore supplies.
Finally the fifth evolution involves logistical consequences in relationship between the producer and the distributor who should focus on changing the nature of their relationship. Indeed, the distributor is likely to move towards payment to suppliers in the quantities sold to the final consumer rather than the quantity purchased and supplied.
Thus, we have seen that to meet the requirements of the market and consumers, creating new products is a requirement of the industry, as well as their availability is the linear which remain the first to satisfy. Indeed, consumer behavior increasingly volatile and international openness and inflation on references have strongly influenced and changed the supply chain. Today, despite many efforts by retailers to adapt their supply chain, the number one enemy remains the high failure rate in linear  (10.3% in France in 2000), which logically leads to a loss of customer and thus a decrease in sales for companies. This figure is all the more surprising that the level of service from the warehouse industry reached 99% for food products.
From this issue, distributors and manufacturers were forced to change their way of thinking. The idea of â€‹â€‹an organization between the two partners based on a close collaboration was discussed. Likely initiated by American giants like Wal-Mart and Procter & Gamble this idea of collaboration has gradually generated a set of concepts (ECR, GPA, CPFR) that we will explain in the next section.
D/ Different forms of collaborative logistics
Before focus and go into details our work on the principle of CPFR (Collaborative Planning Forecasting and Replenishment), it seems important to first discuss and present other logistical collaborative models.
Entreprise Ressources Planning (ERP)
Quickly mentioned in the previous section, the ERP concept was developed in the 90s and has led to a reorganization of large corporations. Even if the ERP is not a model of collaboration between different partners, we felt it was important to mention as it is the basis of all cooperation collaborative and mainly focuses on the internal processes of the company. The implementation of this software package will aim to optimize the flow of information through the exchange of information between different departments of a company. With ERP, internal communication is significantly improved, resulting in a cost reduction.
Advanced Planning and Scheduling (APS)
Unlike ERP which acting strictly on optimizing the exchange of information and communication within the same company, APS integrates communication with external partners in the company. APS tools also focus more on planning components, such as the resources needed to satisfy an order. In addition, APS also includes the "demand planning", that is to say, the study and analysis of demand forecasts and perspective of evolution forecast.
Just-In-Time production (JIT)
Among different collaborative organizations between different trading partners, we also thought it was important to mention the production Just-in-Time (JIT).
JIT is originally a Japanese model whose early origins were in 1945. The objective of this organization is to minimize the stock level or remove in best case the stock entirely. To avoid out of stock, the needs are perfectly anticipated, and parts must be delivered by the supplier at the right time, in the desired quantity. Without storage, the pieces will then immediately go into production where they are manipulated. The company should not have parts too early, since production too early resulting in the stock creation
According to the authors Gratacap and Médan in JIT, the organization of production is based on a command order, on a steady command and operates as pull flow.
In this type of organization, synchronization, perfect coordination, communication regarding deliveries, supply and production are therefore essential. It is also essential to have reliable suppliers, because when there is late delivery, the entire production must be stopped and it can have a devastating impact on the entire supply chain.
Efficient Consumer Response (ECR)
Efficient Consumer Response project was born in the United States in 1992 under the leadership of the Food Marketing Institute and several industrial companies and distributors.
Its true meaning is the decomposition of his name. Indeed, "Consumer" for a precise orientation to consumer needs and "Efficient Response" for a process optimization of the value chain.
In 1996, we assist to the launch of several national initiatives by some members of the ECR. For France, this association includes in 1997 12 industrial (Bongrain, Colgate Palmolive, Fromagerie Bel Groupe Danone, Johnson & Johnson, Kraft Jacobs Suchard, L'OREAL, Nestlé, Paul Prédault, Procter & Gamble, Unilever) and 12 distributors (Auchan, Carrefour , Catteau, Casino, modern countertops, Cora, Galerie Lafayette, Leclerc, Monoprix, Prisunic, Promodes Systems, U). While this association includes today all distributors and 80 industrial companies, it pursues the goal to rethink the offer to the consumer, that is to say, searching the new key success factors (different from competitive price) by the level of service or differentiation or the level of quality.
According to the author Dirk Seifert (see table), an intense exchange of information with the customer will allow to find the optimal marketing mix for all partners involved and thus allow a situation of win-win. Indeed, we can notice that the final consumer is more satisfied thanks to stable prices and a greater availability of products and more innovative or cooler.
Creating a situation of win-win
These statements are also included by the author Vandaele, since according to him, the new cooperative relationships are not a substitute for trade negotiations, indeed they give them just another content. Future negotiations will focus on customer satisfaction above all, and then finding the common interest of both participants.
Vendor Managed Inventory (VMI)
The logistic model Vendor Managed Inventory (VMI) is characterized by the fact that the warehouse management and inventory client is fully supported by the provider. This method enters in the context and techniques of ECR. The latter is responsible for the procurement policy of the warehouse and / or stores and control, as well as inventory and customer needs.
Therefore, this strategy is totally different from the traditional relationship between customer and supplier. In the model of the VMI, the distributor does not longer order any commands to his supplier. This latter must indeed restock his client totally autonomously through information and data that are transmitted. Thereby, from the information about stocks and / or sales provided by the distributor, the manufacturer itself may calculate its forecast needs and adapt its production and logistics resources.
Based on information sharing and cooperation, the strategy of the VMI aims to decrease inventory and stock, reduced the risk of out of stock and therefore improves service levels in perspective to have a better adaptation of means and resources to answer the needs of consumers.
We could see that a collaborative logistics strategy such as VMI required some investment in informatics tools, in order to exchange certain information and data. However, it is clear that smaller suppliers do not have sufficient financial resources to develop and set up a VMI system. An alternative to VMI is then Pooling (grouping together of resources), which is to pre-arrange the collection/deliveries from multiple suppliers into a single transport stream, in order to optimize the rate of filling of trucks and reduce therefore the costs associated with such operations. In addition, it can meet the new requirements of distributors; they can deliver more frequently and in smaller quantities. They also minimize their risks.
Collaborative Planning Forecasting and Replenishment (CPFR)
Evoke and explain the previous concepts such as ECR, the VMI and the ERP were essential and useful to introduce the concept of CPFR and collaborative logistics between distributor and industrial. Now let's turn to the explanation of the main theme of this thesis.
Today we find different definitions of CPFR model in the literature. Therefore, we will rely on various authors to attempt to give a complete definition of this concept.
For example we can cite the authors Dornier and Fender, which in their book "La logistique globale et le Supply Chain Management" define the CPFR as "a collaborative control system that allows developing sales forecasts, production schedules and distribution to ensure optimal replenishment (lower cost, better service levels)."
Generally, the Collaborative Planning Forecasting and Replenishment (CPFR) can be characterized as a change or development in the process of collaborative logistics between manufacturers and distributors. It is particularly built on the concept of ERP, as it continues on one hand the goal of optimizing the flow of information within the company in terms of cost and speed and improved communication. On the other hand, the CPFR also incorporates elements of supply chain management. Indeed, through the CPFR is created the development of an interconnection between the different companies with direct or indirect relationships. They work together with the common goal of forecast more accurately trends, evolutions and future developments in order to make forecasts and find appropriate measures.
Therefore, in this type of strategy, the boundaries between trading partners are more or less replaced by a synchronized production process. This harmonization of internal and external processes among different partners is also strongly similar from what we find in the production Just-in-time.
Have access to the information inventory levels, production and consumption of its trading partner can obviously allow anticipate quickly enough the demand, which will allow to adapt internally meaning within the company the production. Therefore, the responsibility for inventory management, supply of raw materials or goods can be fully transferred to the supplier. This type of organization is also very similar to what we can find in a VMI model
Thus, we can see that in an organization CPFR, Buyer-Seller relationship no longer exists in this kind Orders or customers are more replaced by forecasts resulting from work collaboration between the two trading partners.
On one hand, this first part allows us to explain a number of collaborative logistics concepts between manufacturers and retailers and especially helped us to better understand the origin and explanation of a close relationship between the two trading partners. Finally, it gave us a quick introduction to the main theme of this thesis focus on the CPFR. We will therefore now in a second main part devote our time to explain the CPFR strategy.
Benefits and risks incurs for a strategy of Collaborative Planning Forecasting and Replenishment (CPFR)
Increased competition, end consumers increasingly unfaithful to the brand and demanding in terms of quality constitute nowadays our essential in the economic environment and these are the main problems and difficulties that large distributors must face all around the world.
As a result, they are more likely to change their business strategy and tend to favor a collaborative approach with their logistics suppliers. The first part of this work has enabled us to present some concepts of collaborative logistics between these two partners with the example of a Just in Time Production, Vendor Managed Inventory (VMI) and of course the Collaborative Planning Forecasting and Replenishment (CPFR). Faced with the challenges of reducing logistics costs, minimizing inventory, but also greater availability of products on the shelves, the concept of CPFR, based on cooperation in sales forecasting, it seems in theory the best suited and the most appropriate of all the different forms of collaboration logistics to meet these objectives. Therefore, It seems particularly interesting to focus this thesis on CPFR.
This logically leads us to ask questions such as: Does CPFR strategy allows it really to better integrate the needs of end users, reduce the rate of out of stock and is it really useful?
After presenting globally the supply chain management and the different types of collaborative logistics between manufacturers and distributors in a general way, we will now focus on the determinants and other motivations that lead today many companies to adopt a CPFR strategy. The second major part will be devoted entirely to introduce the origins of CPFR, before developing in a second time the benefits of this practice, but also the limitations and risks showing the difficulty to implement this kind of partnership between distributor and industrial. For this we will use concrete examples with the example of the main U.S. retailer Wal-Mart.
A/ The origin of Collaborative Planning Forecasting and Replenishment (CPFR)
1. Origin of CPFR
The first project CPFR is dating from 1996, was developed between the distributor Wal-Mart and Warner-Lambert in the United States with the help of software companies as SAP, and consulting firm Benchmarking Partners. Initially, the group developed the concept Collaborative Forecasting and Replenishment (CFAR) for rinse mouth "Listerine" and manufactured by Warner-Lambert. The objective was to reduce inventory throughout the supply chain. In addition, the CFAR facilitated a comparison of the sales order forecasts with enabling partners to adapt their production level in case of differences of forecasts. This exchange forecasts had the great advantage especially to fight against instability orders from Wal-Mart to boost sales, organized regular promotions on many items. However, these promotions in the past had caused many difficulties to Warner-Lambert to fulfill orders, saw himself obliged to work with a high level of stocks throughout the year. With the CFAR and a regular exchange of both partners on sales forecasts and applications, this problem has been resolved.
2. The development of CPFR
As we have seen in the previous example, the origins of CPFR are American. It should be noted that all locations CPFR is supported and supervised by several organizations and institutions, most of them are also in the United States. Here we will mainly present the most important: the Voluntary Interindustry Commerce Standards (VICS). As mentioned above, the concept of CPFR was first described, standardized and published by VICS in 1986. This organization has its own committee, composed of manufacturers and distributors, service providers as well as companies from the e-commerce. It should be noted that the mission of CPFR reflects the basic principles of ECR.
B/ Voluntary Interindustry Commerce Standards
In 1998, VICS developed a standard implementation of CPFR to try to standardize it in order to facilitate and guide companies in the implementation of CPFR strategy. This model consists of nine steps that we will try to explain below.
1/Establish cooperation agreement:
The first stage of CPFR model's role is to set a number of rules and conditions as part of a collaborative effort between manufacturers and distributors. These cooperation agreements will not only determine the objectives of each partner, but also include the resources and activities required to contribute to the successful implementation of CPFR. In addition, the joint development of this paper will firstly identify the different roles of each partner in the form of specifications and secondly, to find criteria to measure the performance of each. In total, the first step consists of ten different activities:
- The first step involves the development of a Mission Statement, which provides a common base on the following: cooperation, trust, and provision of resources.
- Objectives and responsibilities related to CPFR. During this activity, the two partners jointly define the objectives of CPFR, as well as the various tasks with specifications. In addition, industrial distributors also agree on criteria for measuring the performance of each. Finally, they define all processes and establish exception criteria in forecasting sales and fixed controls.
- Skills and resources. CPFR processes need to fix and identify in advance a very precise way the skills and resources of all stakeholders. Which Departments are able and willing to invest long term in a CPFR process? What additional skills must be created in addition internally or purchased from a supplier?
- Points of cooperation. After identifying the key departments in the previous step, it is important to know which of these functions must accompany the process and act as collaborative links and the link between the two partners. These functions will then be the decisive elements and organs within the CPFR process.
- Exchange of information and data. CPFR application requires mandatory information on the manufacturer and the distributor. At this level of step 1, it is important that both partners agree on the real need for information and especially on what information must be exchanged (identification data forecasting). In addition, they agree on frequency of data exchange, the nature of the data exchange, the maximum time allowed to respond to a request for information and finally a Forecasting Collective Methodology.
- Rules concerning confirmation and delivery. This activity develops the rule and obligation to order confirmation and delivery within the CPFR process. It includes the phase which a forecast collective becomes a fixed order
- The allocation of resources. During this activity, the two partners decide CPFR resources allocated. For example, they choose the number of people and the time required for the use of CPFR process. This includes the allocation of resources for the development of processes and their management and the extent to which initiatives can be integrated into process improvements.
- Resolving conflicts between partners within the CPFR. This activity aims to establish rules of conduct to manage potential future conflict between the two partners in the CPFR. It is indeed easier to manage conflicts if measures to resolve these crises have been made and accepted by both parties in advance.
- Regular assessment of agreements. This is to schedule regular evaluations of agreements between the two partners on the CPFR strategy. This includes in particular the choice of relevant performance indicators.
- The final decision of a cooperation agreement. To conclude this first step, the two partners use this cooperation agreement as a guideline for CPFR process. This agreement can obviously be modified and adapted to new needs or constraints.
2/ Develop a business plan together
During this second stage of CPFR model, the two trading partners develop a trading plan or business plan together, while respecting their own business strategy. This includes targets and strategies specific to each product category. During this plan they agree on, for example the minimum quantities ordered, or the interval between the two commands. Indeed, the development of a common business strategy improves qualitatively expected, since the necessary information will be transmitted by the two partners.
3/ Develop and improve sales forecasts
The data and information supplied by the distributor, such as shopping outlets and actions from future promotions, constitute the essential basis for determining an accurate sales forecast. It will be easier to estimate future sales, an important indicator in the development of a business plan together.
4/ Notify unusual sales forecasts
The purpose of this fourth step is to identify all products that are an exception in the process of cooperation established by the two trading partners. Indeed, it can be very seasonal product. These criteria for products that are an exception are set in the first step.
5/ Find solutions on unusual products
The fifth stage of CPFR process includes a common treatment product that is an exception in their management through Real Time transmission between both partners. Every change is immediately transmitted to develop a new sales forecast. This operation accelerates communication and decision making between the manufacturer and the distributor and thus improves the reliability of the control thereafter.
6/ Generate supply program
During this step, specific data on sales are related to inventory strategies of each partner to create and simulate a forecast control order. The latter can not only find optimal quantities per order, taking into account the objectives of storage, but also the final destination for each product. It is therefore an essential element during the phase of a fixed order.
7/ Notify the planned orders not valid
As its name suggests, the aim of this seventh step is to identify and list each product that is an exception to the collaborative processes put in place by the two partners concerning order forecasts.
8/ Find solutions on unusual products
The eighth step is similar to the fifth and includes a common treatment items listed in the previous step to find the optimal solution. This is done thanks to a Real Time transmission between partners.
9/ Create orders
During this final stage of CPFR, forecast order is converted into a fixed order. The latter can be generated either by the manufacturer or by the distributor. This decision should be made â€‹â€‹based on the experience and competence of each management processes, equipment for system information and resource availability.
C/ Benefits related to this process
After referring to the nine steps of implementation of CPFR developed by VICS, let's have a look on benefits associated with this type of strategy.
Anticipated benefits of CPFR
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Let's have a look on qualitative benefits. This allows a better ability to react to changes in customer demand. Systematic reduction of out of stocks and inventory turns allow optimized supply chain as a whole more flexible and reliable, which leads to a higher rate of linear service and therefore the satisfaction of the consumer.
Sales forecasts are more accurate. As mentioned above, the collaborative approach between industrials and distributors and allows at the end to develop a sales forecast in collective and it is therefore much more reliable. This can be explained by the fact that different business partners (supplier's supplier, supplier, distributor ...) regardless of their position within the supply chain can transmit their knowledge in the calculation of sales forecasts, as their point of views on market, information concerning consumer and knowledge from research. The exchange and merging from multiple knowledge constitute the basis for more reliable sales forecasts.
Channels of direct and sustainable communication. The establishment of a direct and sustainable communication between the two business partners facilitates and increases the exchange of information throughout the value chain. In addition with a continuous exchange of data, perturbing elements can influence the level of sales (weather, actions of competitors ...) and can be quickly taken into account.
According to the manager at Unilever France, a direct and sustainable communication also allows a better coordination for promotions actions. Indeed, the latter often cause out of stock if they do not result in an exchange with the supplier. In case or one of the two partners would implement a promotional actions on products, the CPFR enables retailers and suppliers to exchange information and coordinate all production levels.
Increase in turnover. Cooperation in planning, forecasting and supply of goods can radically reduce out of stock and warehouse shelves. Logically, the implementation of CPFR can recover the level of turnover lost before. Therefore, all links in the supply chain benefits from this increased level of sales.
Decrease inventory levels. One of the main objectives and benefits of any form of collaborative logistics of CPFR are avoiding and the fight against bullwhip effect. To better understand the importance of CPFR in this area, it seems necessary to explain at first the bullwhip effect.
The bullwhip effect is a typical phenomenon in command of chains logistics. It consists of an extraordinary amplification and variation in demand as far as we took distance from the end customer meaning the consumer. This effect is the result of several factors:
- The degree of inaccuracy of information, lack of transparency in the supply chain, long Lead-Time and especially a pronounced disconnect between consumption (actual customer demand) and production (actual activity of the plant).
Bullwhip Effect 
Bullwhip effect diagram
As we can see from the figure representing the "Bullwhip Effect", the degree of inaccuracy of the information exchanged between trading partners increases gradually as one moves away from the end consumer. This leads logically increases stock levels at each stage of the supply chain, especially in the form of safety stocks, in order to cope with increases in demand variations. This fact is even more alarming because the storage of product is very costly to a business firm.
The heart of the problem is the lack and poor quality of information (both infrequent and implausible) between production and consumption, the first step is to make the company focuses on demand (Pull System and Lean Manufacturing). It must have a vision of the entire supply chain and what retailers sell. Thus, large food distributors and others took consumption information directly in supermarket checkouts.
Several solutions could solve this problem:
-Apply Lean Manufacturing (flexibility and production flexibility)
- Reduce confidence in the forecast
- Increase the transparency of information in confidence by the data directly from end client
-Transmitting this information across the channel in order to avoid the amplification of small variations.
-Make orders with a computer system that reduces variations orders, work on "averaging periods" (which also reduces the administrative costs of management).
-Avoid collective orders
-Avoid price promotions
Lower costs. An adjustment of production plans of suppliers of suppliers and manufacturers as sales forecasts can obviously optimized to save costs. In fact, more production plans can be planned in advance, the less the company will need to hire temporary staff to cope with sudden increased and unexpected demand. In addition, the decrease in inventories can logically reduce storage costs (rent warehouse, handling, packaging, insurance management).
Difference between traditional and collaborative business relationships
In conclusion, to return to the benefits of CPFR strategy and differences between traditional trade relationships and collaborative relationships between two partners.
The benefits of CPFR are significant. Thus, there is first a big difference in supplies. Indeed, in the traditional relationships between suppliers, the thinking was only step by step. The provider received an order, and ensures to deliver his client in time and saw himself compensate for this task. In a collaborative approach on the contrary, the vision of the supplier is no longer limited to the next level. It is indeed going beyond, since the communication between the different partners has been extends throughout the supply chain and value chain. Suppliers and suppliers of suppliers are warned in real time of significant information concerning the eventuality of increases or decreases in quantities to be delivered due to changes in demand.
Indeed relationships are changing:
- Planning in series to Collaboration planning
- Management of issues reactive to proactive
- Coordination within the company to coordination beyond the wall with other partners.
D/ Difficulties and disadvantages of this process
If the use of CPFR is a component of corporate strategy that opens new opportunities, it is essential to know that this practice is not obvious to set up and it also creates many difficulties. This section will be dedicated to the main obstacles and fears of an implementation of a project of CPFR.
The disadvantages of this process
It is obvious that the CPFR offers opportunities to improve a given situation. However, it is difficult to conceive of a distributor decides overnight to change its strategy to work hand in hand with its supplier and its other trading partners to benefit from the advantages offered by CPFR. Indeed, CPFR is difficult to implement and there are large differences between theory and practice.
Many companies face the first difficulties even before the launch of the project. Leaders wishing to implement CPFR may face initially a misunderstanding, discontent, or even a refusal on the part of employees who face a policy change, fear a wave of layoffs. Moreover, it is often difficult to motivate staff to learn new things and change their methodology of work.
Another problem that a company may face is the cost resulting from the implementation of CPFR, including employee training, technical infrastructure. This kind of cost will, however, be quickly compensated by the benefits offers by this pro
In view of the fact that in the upstream phase to the implementation, this phase included the research of a partner with whom the testing phase must be performed, external problems between providers and social partners may appear.
A direct result of an implementation of CPFR is that companies exchange data and gaining information about their trading partners. This therefore increases the importance of safety and creates a logical link between the partners. The disadvantage is that the company itself must transmit information to his partner and thus give access to data that were previously considered as confidential. The close relationship with the supplier certainly decreases the risk of losing confidentiality, but mainly causes a lack of flexibility and makes the change of supplier more difficult.
The major obstacle to the expansion of CPFR remains its cost. Indeed, to coordinate and synchronize processes, trading partners must invest in technical and technological means, for the great efficiency of information systems. In addition, the starting level of investment and the results of each partner involved in CPFR collaboration type are different. This can be a source of jealousy and conflict that it should be well anticipate to avoid this type of problem.
Chercher exemple de cas d'implantation CPFR ds entreprise
This second part of the presentation was aimed to explain the concept of CPFR. We have explained the particular model developed by the U.S. institution VICS, in which we can identifies nine steps for a successful implementation of a CPFR strategy. In this type of organization, communication between trading partners is essential and extends throughout the supply chain and value chain. CPFR, based on close collaboration between a distributor and supplier at sales forecasts levels, would respond favorably to current economic issues such as cost reduction and lower rates of failure (out of stock and failure in the link of the supply chain). Indeed, we found that this strategy had many advantages, like improved reliability of sales forecasts, an increase of the turnover or inventory reduction. However, the success of this concept is no guarantee and there are many obstacles. The costs of implementation, the difficulty in finding business partners or lack of internal human resources are among the main drawbacks of CPFR.
The prerequisites for a successful implementation of a strategy CPFR
CPFR operation cannot be improvised: Once the decision to implement the CPFR to precisely defined objectives, it should go through a number of stages to follow.
The previous section has allowed us to familiarize ourselves with the benefits but also many risks that are inherent in a project of CPFR. However, this brings us to the question discussed above: are these dangers preventable? The third part of this work will be devoted entirely to the true success of a project CPFR and will include information on the traps to avoid. We will discuss in particular the importance of trust and the role of new technologies.
A/ Traps to avoid for a success implementation
A successful implementation of a strategy of CPFR is based primarily on good management of multiple risks and disadvantages of this kind of practice. Indeed, there are some methods that minimize the dangers that we discussed at Part II, especially as the risk of alienation of employees or lack of willingness to cooperate.
In this regard, the author Dirk Seifert in his book "Collaborative Planning Forecasting and Replenishment, How to create a Supply Chain Advantage" discusses, among other traps to avoid, but also the prejudices that some companies have face to the set up of CPFR strategy in the consumer goods industry.
- Trap 1: The first trap that many entrepreneurs fall into is that they perceive the implementation of CPFR as too painful. Indeed they consider that the expected benefit of this strategy does not compensate the effort to achieve a result and would therefore likely not to try. In reality, the majority of CPFR practices are implemented with resources halftime without trading partners have the same motivation to work in a collaborative manner on a daily basis, which prevents smooth logically false and expected benefits of CPFR. That is why we must encourages entrepreneurs to not discourage face to the first difficulty, ensuring them that all necessary efforts will be rewarded.
- trap 2: For a successful implementation of CPFR, there are many entrepreneurs who think that we should necessarily pass through the nine stages of VICS. This idea is wrong. It is indeed rare to see a company succeed to implement all nine stages.
Contrary to what many entrepreneurs think, it is not necessary to successfully implement the nine steps of the VICS to successfully implement the CPFR strategy. They should not be the ultimate goal of any implementation CPFR. Instead, the ultimate goal is to successfully collaborate on important issues between trading partners and exchange of critical data. VICS model can indeed serve as a guide and guideline but it is not necessary to apply this method perfectly.
- trap 3: Even if the data exchange is an important step towards the CPFR it remains that it is insufficient to be considered as a collaboration. Two trading partners exchanging data simply is nothing more than a slightly more different situation of the EDI (Electronic Data Interchange). The fact of collaborating as we mentioned in part II, allows reducing inventory levels and act proactively in case of problems and provide the best service rates. Although difficult to implement, the collaboration between industrial and distributor remains indispensable for CPFR.
B/ The key factors success of this process
The following parts will have to present the true objectives of the key success factors of implementation of a CPFR project. To present it in a general way, we can rely on a study conducted by the organization "CRITT transportation and logistics "  .
Identification of actors' expectations and highlighting a theme of common interest
Thinking about how to implement and meet the expectations and objectives associated
Analysis of convergence and synergies possible around flows and processes
Definition of organizational scenarios to meet these expectations
Techno-economic analysis of deployment options and decision of implementation
Testing, monitoring and control
Structure of process for the rise expectation
We can see that the desire to work from all partners is essential for a successful implementation of CPFR, but alone it is