Apparel and garments industry is one of the toughest to survive in. The many challenges of the trade make it extremely difficult for manufacturers to compete and thrive in. The biggest task is to manage the supply chain and the inventory of products from the suppliers to the end consumers. Using supply chain tools like JIT (Just in Time) helps in streamlining activities like production planning, purchasing, operations, scheduling, and shipping.
Using an advanced and technologically forward model for apparel retail that integrates all the involved members of supply chain including retail and distribution activities can help in efficient functioning of the garment industry. Collaborative, Planning, Forecasting, and Replenishment (CPFR) is a concept that can help apparel retailers build a strong connection with their suppliers or vendors and hence creating a reliable bond for growth.
CPFR which initially began as a pilot test programme run by the retail giant Wal-Mart in 1996 which made use of internet communications with one of their suppliers in order to cut inventory cost, was later emulated by many retail companies in the U.S. after witnessing the success of the former. The model aids in eliminating 25 per cent of the inventory cost and eradicates the need of piling up excess stock of garments. The system uses Electronic Data Exchange (EDI) to share information among the apparel retailer and supplier.
According to Gene Fliedner, CPFR is a web based attempt to coordinate the various activities including productions and purchase planning, demand forecasting, and inventory replenishment between supply chain trading partners. The concept provides for a basic framework where in collaborative parties work together to satisfy the demands of the final consumer, who remains in the centre of the model.
The processes of setting up a CPFR in an apparel retail company and for a cohesive approach are as follows:
- Creating a front end partnership agreement by specifying the objectives to be achieved through the collaboration. Resources required for an appropriate collaboration for example hardware, software, and performance metrics also need to be specified. Expectation of confidentially and the prerequisite to share sensitive information about the company need to be mutually understood.
- Devising a joint business plan for handling and running different processes and constructing a common strategy for course of actions.
- Developing demands of garments and forecasts require apparel retailers to share information from the point-of-sale items for suppliers to identify the potential demand of a particular style, colour, or size.