Texan Foods - Case Study Example

Memo Gordon Ross, Vice President Supply Chain Operations. Angela Preston, Category Director.DATE: SUBJECT: Collaborative Planning, Forecasting, and Replenishment (CPFR) Initiative.Overview The Voluntary Inter-industry Commerce Solutions (VICS) association has established that the use of CPFR in handling a business’ replenishment problems is an effective process of ensuring a smooth flow of orders from the suppliers to the firm and finally to the customers. Collaborative planning, forecasting, and replenishment is a platform where supply chain partners use their information technology and share information regarding the operations specifically agreed upon.

The data is critical in developing future forecasts and demands enabling the firm to meet its customer base targets at very low coast when appropriately implemented (Chad, 2010). Benefits derived from the collaborative sharing of information through the system are numerous. Businesses attain less stock-outs, more accurate and better forecasts, more powerful visibility of stocks, increased sales, a lower on-hand inventory, and a decrease in the costs of goods sold. The above mentioned benefits motivated the employees of Texan Foods and Valley Backers to aid a hand to ensure the success of the pivot study conducted.

Problems the company faced Despite the increase in the sales of some of the commodities offered by Texan Foods, there were various problems that needed to be addressed. The forecasts had been out-spaced by the inventory holdings of some category of stock such as backed goods. Moreover, the supply metrics for these commodities did not meet their mark. In addition to these, there was an unexpected rise in the stock-outs at the Distribution Centers from 5% to 7%. The percentage was steadily rising to 10%.

Valley Backers, one of the suppliers was also expressing their concerns regarding the inconsistencies in the stock orders.Progress and implementation of CPFR The implementation of the system faced very many challenges. Preliminary agreements between the firm and Valley Backers were drafted. The type of product to be piloted and the level of collaboration required were agreed upon. However, both companies had different expectations on the methodology of carrying out the pilot study.

We wanted to start at a slow rate, sharing only a small range of data on pricing and sales, while Valley Backers wanted complete access to all the databases including competitors’ products and pricing data. We did not agree on the number of products to be tested and the duration of the pilot study. Moreover, employees who had shown much enthusiasm for the system lost their morale as the time elapsed. However, some employees who were hesitant at the beginning became more willing to take up the task and assist in its implementation.

The pilot study conducted resulted to escalated costs of operations of both the companies. The escalated costs were attributed to the need to acquire new infrastructure that the system required. The technologies of both companies were non-connective. New procedures were put in place to ensure there is a smooth flow of data between the firms. A common CPFR package was utilized to manage and facilitate the alliance. However, the implementation of the new process of managing replenishments led to an increase in inventory accuracy from 97.7% to 98.3%, orders reduced by 5% as inventory declined by 1.2%. Moreover, a good cordial relationship was created between employees from both sides.

Additional future work From the improvement observed in inventory accuracy, orders levels and the decrease in inventory, I can confidently conclude that CPFR is a platform that the company could use to reap greater benefits. However, a lot of time and resources need to be invested to develop the platform. The front-end agreements should be established and to increase the returns, the platform should be introduced to other key suppliers of the firm and other products should also be incorporated into the process.

Research should be conducted to see how the weaknesses of the system could be reduced or better still be eliminated. An impeccable system, with proper ground rules and procedures in place, would undoubtedly yield enormous returns for all the parties concerned.Reference list Chad W. (2010). 1 Launching CPFR at Texan Foods 1: Improving Inventory Replenishment with Collaborative Activities and Technologies. Texas Christian University.