Mass-market retailers can represent nearly half of a manufacturer’s revenue, and those that can successfully harness collaboration with this critical retail channel will gain a strong competitive advantage in a crowded marketplace. Traditionally, both manufacturers and mass-market retailers have established a joint collaboration so that manufacturers are able to improve the accuracy of their demand forecasts and better manage their replenishment and inventory to fulfill demand from retailers. Still, translating collaboration for long-range plans – e.g., beyond one lead time – has proved elusive. Sensing this gap, leading mass-market retailers are adopting time-phased forecasting and multi-level inventory planning capabilities to generate integrated supply chain plans across an extended period of time. This increased visibility also benefits suppliers, with the potential to reduce variability, lower expediting costs, improve perfect order metrics, lower safety stock and proactively plan their supply chain to enhance overall customer service, efficiency and margin.

“To take full advantage of the retailers’ integrated and time-phased supply chain plans and translate them into new levels of customer connectivity, manufacturers must harness the synergy of Collaborative Planning, Forecasting and Replenishment (CPFR^®) and Sales & Operations Planning (S&OP),” said David Johnston, senior vice president of manufacturing and wholesale distribution, JDA Software. “By creating this unified process, retailers, wholesaler-distributors and suppliers can expect higher performance levels and a measurable competitive advantage.”

Below, JDA offers manufacturers five recommendations for successfully linking CPFR and S&OP to create a consensus demand plan that can help to streamline the connection point between manufacturers and their mass-market retail partners.

1. Begin with a Best-Practice Methodology: By nature, processes built on best practices and lessons learned from industry leaders, such as S&OP pioneer Oliver Wight, are more scalable and repeatable. What’s key is finding a methodology that ties independent best practices into a more holistic process that involves all partners in the supply chain process. Manufacturers also should look for a methodology for connecting CPFR and S&OP that is built on insights from a combination of retail partners. Thus, it will be easier for a manufacturer to “sell” its own mass-market retail methodology for connecting CPFR and S&OP. Currently, the Voluntary Interindustry Commerce Solutions Association (VICS) and other leading third-party organizations are forming best-practice groups – with an opportunity for manufacturers and their trading partners to participate – to validate the synergy of connecting the CPFR and S&OP processes.

2. Evaluate Your Technology Platform: Next, manufacturers must ensure that they have technology that is scalable and can support a linked CPFR and S&OP process.