How Integrated Operations Are Controlled through Collaborative Planning - Essay Example

Management al Affiliation) QUESTION How integrated operations are controlled through Collaborative Planning, Forecasting, and Replenishment (CPFR) and associated execution techniques CPFR is a set of techniques that aims at satisfying the demands of customers by combining the intelligence of all the participants and partners in the supply chain of a certain commodity. This technique has the major aim of improving the efficiency of the networks of supply, by putting emphasis on the reduction of inventory costs, logistics, and transportation costs, thereby increasing the availability and accessibility of a commodity to the consumer. Through its operation, it provides the channel, which facilitates flow of goods, information and services (Diederichs, 2009). The control of integrated operation by the CPFR is performed through strategic planning, management of demand and supply, execution and analysis. In planning and strategy, the CPFR sets the goals of a firm, with distinctive outlines of the scope of the roles, responsibilities, procedures, and checkpoints. This Joint Business Plan spots the hindrances of effective demand and supply, and eliminates these obstacles through inventory policy changes, introduction of products, promotions, and opening or closing of branch stores (Sattar, 2012). The management of demand and supply focuses on sales forecasting and order forecasting. Sales forecasting projects the demand of consumers at a certain sales point. On the other hand, order forecasting determines the orders and deliveries depending on the sales forecast (Diederichs, 2009). The execution role of the CPFR in integrated operations constitutes the implementation of the firm’s forecast into the firm’s real demand and fulfillment of the orders through production, stocking of stores, delivery and shipping. In addition to execution, the CPFR analyses the planning of operations and calculates the returns of the business to determine the achievements of the strategic plans, or to expose the need for the development of more alternative strategies (Choi, Hui & Yu, 2013). QUESTION 2: How do inventory management practices and policies influence planning inventory requirements and managing uncertainty? Inventory is a critical visible asset for most firms, and determines the size of a firm’s purchasing power. The inventory levels are subject to focus by many company shareholders and executives. Despite this, the focus has reduces drastically, causing sever implications on the supply chain. The administration of inventory is necessary in the planning of inventory requirements and management of uncertainties that may occur in a business. The use of Pareto inventory practice enables the management to establish the amount of inventory on the low demand items that indicates the shortage of a product, the need for transitions or changes in the engineering technique. With the use of sales, this practice enables the management to identify the characteristics of a supply chain, and obtain the data necessary to improve this chain. Furthermore, the revision of order quantities helps to establish the trend in the capacity of a company’s inventory. Order quantities that are smaller and more frequent often translate into fewer inventories. This enables the firm’s management to strategize on reducing the time and costs used for set up, improve the storage procedures at the warehouse, re-evaluate the costs incurred by the firm’s position to hold inventory (Muller, 2003). The main goal of this practice is to reduce inventory. By reviewing the forecasting, the firm is able to reduce the costs that accrue with faulty forecasts. The elimination of archaic stock is a good inventory policy that yields long-term benefits. This enables the firm to write off the outdated stock, and replace it with more productive inventory. Besides, the centralization of inventory enables the firm to save the costs of distributing facilities to multiple warehouses. This also increases the frequency of orders, hence lowering the quantity of overall orders. Through the inventory practices, the firm is able to build a strong customer base by understanding the needs of individual customers. QUESTION 3: Describe the major demand forecast components, and why it is important to decompose demand into these components when developing new forecasts. Demand forecasting is the projection of the possible happenings on the company’s existing sales of products (Choi, Hui & Yu, 2013). The major components in demand forecasting are the finance: inputs from the marketing and sales departments, and production techniques. The components all lead to the final demand forecast, which is the accord for the mangers who took part in the production process. It is important to decompose demand into the above components when developing new forecasts because by decomposition (Choi, Hui & Yu, 2013), the firm is able to adjust the seasonality. This multiplies the normal forecast by the seasonal factors to come up with an accurate forecast that is conversant with the seasonal differences. It also helps the firm to determine the consumer taste and preferences during varying seasons. QUESTION 4: What are the major challenges associated with using CPFR in forecasting accuracy? The CPFR assumes that the partners in a business have the ability to see the effects that collaboration has by encouraging significant (Diederichs, 2009) upgrades in the infrastructural base of a firm. Furthermore, the CPFR depends on the healthy relations between partners. Despite these assumptions, the use of CPFR to forecast accuracy has a myriad of challenges. The technique relies on the integration of all partners and departments in an organization for its success (Sattar, 2012). This includes the outlines of the responsibilities and roles of every partner in the process of implementation of integrated operations. This makes the selection of partners tough. The objectives and goals vary in each organization, making it difficult for the CPFR to point out the common objectives. Besides, the challenge in the preparation of logistics, inventory control and operation plan makes the effectiveness of the CPFR limited. In addition to the preparation difficulties, the positional strengths of some firms over others influences the operation of a market by applying pressure on determination of the terms used by the suppliers in the market. Therefore, this affects the operation of CPFR (Sattar, 2012). The inability of all the partners to offer confidential information hinders the flow of information in the market. QUESTION 5: Describe the relationships between service level, uncertainty, safety stock, and order quantity. Speed and availability are the major important factors that determine the level of service delivery. These two factors, speed and availability, are affected by demand and supply cycle uncertainties. Therefore, in order to maximize the certainty in the levels of services provided, the maintenance of safety stock applies (Muller, 2003). The availability of huge amounts of safety stocks cause a significant increment in the transport and shipping costs, thereby increasing the total costs incurred by the firm. If the order submission occurs in larger quantities by the consumers, the uncertainties definitely reduce. Due to this, the need for safety stock alleviates (Muller, 2003). The uncertainty substantially reduces when there exists close and continuous communication between the customers and suppliers. QUESTION 6: Analyze the differences between reactive and planning inventory logistics by explaining the major advantages and implications of each strategy. Reactive inventory strategy deals with strategic relationships between the customers and the suppliers (Berry, 2011). It develops structural designs to meet the needs of specific customers. This inventory strategy is good in the need for building a constant consumer relation, but it does not take the concerns of smaller customers as it focuses mainly on dealing with the large suppliers. On the other hand, planning inventory logistics emphasizes on the coordination, production, demand, procurement, product allocation, load building and transportation to deliver inventory (Berry, 2011). This strategy focuses on the feedback of customers by execution of activities based on the needs of the consumer. This strategy is effective in the synchronization of production, sales and distribution. Contrary to its benefits, the strategy is costly especially factoring in transport costs (Berry, 2011). References Berry, W. (2011). Manufacturing Planning and Control for Supply Chain Management. McGraw-Hill Professional. Choi, T., Hui, C., & Yu, Y. (2013). Intelligent Fashion Forecasting Systems. Dordrecht: Springer. Diederichs, M. (2009). Collaborative planning, forecasting, and Replenishment (CPFR). München [u.a.]: Grin-Verl. Muller, M. (2003). Essentials of inventory management. New York: AMACOM. Sattar, T. (2012). A CPFR readiness assessment model. (Berry, 2011) (Choi, Hui & Yu, 2013) (Diederichs, 2009) (Muller, 2003) (Sattar, 2012) Read More