FORECASTING COLLABORATION IN THE EUROPEAN GROCERY SECTOR: OBSERVATIONS AND HYPOTHESES

Abstract

In recent years, the Collaborative Planning, Forecasting and Replenishment (CPFR) initiative has made forecasting collaboration between retailers and suppliers subject to much attention. However, despite successful pilot implementations, the adoption rate of collaborative practices has been slower than expected. This raises an important question: If forecasting collaboration is as valuable as suggested, why is it not more common? This article presents the results of a case study examining four collaboration projects involving a total of four suppliers and one retailer operating in the European grocery sector. Factors likely to have an important impact on the feasibility and attractiveness of forecasting collaboration are identified and presented in the form of testable hypotheses. The main finding is that most collaboration models and the CPFR initiative seem to build on invalid assumptions concerning retailers’ forecasting needs, resources, and processes, as well as suppliers’ capabilities to benefit from the more accurate demand and forecast information made available through collaboration.