| In recent years companies have realized that although their focus on consumer satisfaction has been important in achieving in-house innovation, their competitiveness and profitability have not improved considerably. The fact remains that during the process of achieving reduced cycle time and enhanced delivery rate, inventory is transferred from one firm to another, but not completely removed from the supply chain. Secondly, over the past two decades, firms have utilized enormous resources in terms of time and money in upgrading their Information technology systems, rather than focusing their planning processes to integrate cross functional processes.; Businesses have now realized that collaboration among trading partners is a more effective process to deal with issues related to inventory management, as compared to the customary approach of shifting the load of inventories. Increased outsourcing, global supply networks, and desire for a more precise demand information have given impetus to the initiative called Collaborative Planning Forecasting and Replenishment (CPFR). The essence of CPFR is that it can be effectively used to diminish errors linked with conventional method of forecasting through the support of inter-firm collaboration to respond as per market demands.; This research demonstrates, through a dynamic simulation approach, the positive performance outcomes of CPFR: increased sales, improved profits, reduced inventory levels, reduced lost sales and improved order fill rates. The concept that CPFR efficacy depends on various factors suggests that the proposed relationship between CPFR and performance is moderated by a number of variables such as demand patterns, lead time, order frequency, ordering policy.; The results indicate that demand patterns (nature of demand) and lead time have profound impact on the effectiveness of CPFR. The interaction effect of lead time and order frequency is also significant in terms of all the performance measures of CPFR at the Retailer and the Distributor levels of a 3 echelon supply chain (Retailer, Distributor and Supplier). This study will provide companies an insight into approaches to improve their supply chain performance in presence of these variables that are more a norm than an exception. |
