Introduction
Severe competition and market share increment in the world has made companies struggle to succeed in achieving their customer’s service preferences and meet their expectations. Companies have invested a lot in the use of supply chain techniques to achieve competitive advantage. According to supply chain management is defined as the use of several strategies that are operated to efficiently integrate suppliers, retailers, manufacturers, and customers in selling, buying and distributing goods and services effectively and efficiently while maintaining the service expectation while inventory control management is the proper management of information with the objective of maximizing customer service, efficiency of production and purchasing, profit, and minimizing inventory investment . This essay will discuss on how Coca-Cola's Bottling Company experience supports Collaborative Planning, Forecasting, and Replenishment (CPFR) principles on inventory forecasting.
Vast use of CPFR technique has led small, medium and large companies realize an increase in productivity and revenue with competitive advantage winning. CPFR is a developed nine-step model that takes a complete approach to supply chain management and inventory control management in collaborated participants using agreed metrics, language and agreement with the mission of “to create collaborative relationships between buyers and sellers through co-managed processes and shared information” and a goal to integrate demand and supply processes in order to improve efficiencies, increase sales, reduce fixed assets, and reduce inventory for supply chain while satisfying customer needs. CPFR ensures effective inventory control by ensuring that combinations of factors are met. According to the five factors that are required to be met include timely and accurate information on what to be stocked, when, and to whom. Another factor is having suitable models in making the right decision, the third factor is computer that controls stock accurately and efficiently, the fourth factor is having a clear objective of the company while the last factor is implementation when having best management of resources. These nine step processes are linked in four phases of planning, forecasting, replenishment, and execution phases.
Coca-cola Bottling is a company that manufactures, stores, and distributes soft drinks to suppliers, retailers, and customers. Before implementing CPFR system, it was producing products efficiently but did not know what the company should be making in a given time thus being slow in market share, having challenges in inventory control, and not knowing how much to distribute. Plants and distribution centers were decentralized with poor control of inventory . CPFR system has enabled them lower inventory for higher revenue than before, improved customer service, and improved return on technology investment. CPFR system has enabled Coca-cola Bottling Company be united with distributors, retailers and customers in making business plan in sharing information on supply chain.
, discusses four phases of CPFR system. Phase one of the system is planning with two steps as developing a Front-end agreement and crafting a Joint Business Plan steps. Coca-cola Bottling Company adopted this phase by having an internal collaboration on the front end and partnering with Manugistics for review of their plan. The company also has a demand plan for production and distribution for efficient delivery. . Phase two of CPFR system is forecasting phase with six steps as; creating sales forecast, identifying exceptions for sales forecast, resolving on exception items, creating order forecast, identifying exception for order forecast, and resolving on exception items. Coca-colaBottling Company followed this phase by involving a hierarchy of people in the company by enabling its field sales staff to have real-time and not involving customers directly. It ensures valid input is enters and if not a system triggers an exception and also gives automatic alerts. There is daily and weekly update of orders to ensure information reliability. Forecasting and distribution were now centralized to have visibility between plants and distribution centres . Phase three is executing with steps order generation and delivery execution where order is generated and then obligated to delivery. The company adds order in Manugistics' Transportation Management where all orders are added for shipment thus optimal transportation. Payment is then made using freight payment system thus doing transaction online which is reliable and available anywhere anytime.
Since the implementation of CPFR system, Coca-colaBottling Company has also followed the five factors to ensure effective inventory control by ensuring that information they have is accurate and timely thus leading to efficient delivery of soft drinks. It has also implemented best hierarchies and modules for communication where it have levels for communicating with customers and distributors and also modules for transportation such as Manugistics' Transportation Management. The company has increased forecasting accuracy by using inventory control management systems that triggers execution if an error is made by user and gives alert on something. Its meaningful objectives are met where there is inventory reduction, capital expenditure reduction, sharing of information, and thus ending up meeting customer service level.
While writing the essay there are limitations of not accessing some documents because some documents were only accessible to registered users only who are students from a given institution. Also, some electronic documents had to be purchased thus not accessible.
References
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