COLLABORATIVE PLANNING, FORECASTING, AND REPLENISHMENT IN EUROPEAN GROCERY RETAIL

Abstract

This report is the documentation of a seminar study in industrial management done at Helsinki University of Technology. The client of the study was Netlog Project led by TAI Research center. The research problem and the scope of the study were set to address a particular need of the client. The research problem was represented with questions: How has Collaborative, Planning, Forecasting, and Replenishment (CPFR) been implemented in Europe, where have the implementation projects led into, and what can be learned from them? The cases providing sufficiently information were selected, described, and analyzed. On the basis of the analyses, a suggested framework for CPFR implementation was provided. The eight cases studied were implemented by Eroski and Henkel, Condis and Henkel, Metro and Procter & Gamble, Ketjuetu and Valio, Delhaize and Vandemoortele, Sainsbury’s and Unilever, and within The Co-operative Group, and by a group consisting of Veropoulos, Elgeka, P&G Hellas, and Unilever. The analyses provided the following findings: Firstly, the most tangible benefits from CPFR seemed to take more than a couple of pilot projects to be realized. Secondly, the companies favored forecasting at the distribution center level and used the Point-of- Sales data relatively rarely. Thirdly, the companies clearly understood the value of partnership and using shared forecasts but there were still problems in integrating the forecasts into their operations planning. Fourthly, some of the CPFR process steps appeared to be misunderstood, which resulted in CPFR processes that were in fact quite far from the original CPFR model. On the basis of the above findings, a thesis in form of a CPFR implementation framework was developed. The framework emphasized five significant stages of the implementation. They are: Forming a sound basis for the collaboration, making sure that CPFR is understood, evaluating the approaches to collaboration, reassuring that forecasting is done at the right level and with the best possible data, and keeping the focus in the objectives that really matter. Finally, it was suggested that case studies on American implementation projects or studies comparing different collaboration models would possibly provide interesting and valuable insights.