According to a 1996 study, retail product stock-outs in the industry occur at an average rate of 8.2%. The stock-outs led to lose of sales and customer dissatisfaction, and then eventually affected the profit margin of retailers and manufacturers significantly.
             The traditional answer to addressing customer service problems has been to increase inventories. But high inventory means high cost. From the retailers' side, the more unpredictable demand is the more inventory is required to manage the risk. From the suppliers' side, the uncertainty of supply processes creates problems for inventory management. Effectively managing inventory buffers and supply process variability can reduce the need for inventory. Inventory reductions in the supply chain should also be expected to reduce operating costs.
             Collaborative Planning Forecasting and Replenishment (CPFR) is a set of norms and procedures created by the Voluntary Interindustry Commerce Standards Association (VICS), driving companies towards common business planning procedures, and searching for higher efficiency in the supply chain by establishing standards to facilitate the physical and informational flow. CPFR allows buyers and sellers to collaborate in forecasting and ordering. Moreover, collaborative control also allows a better production and distribution planning so as to optimize the balance between cost and service. Using CPFR, value-chain participants can minimize inventories and focus on value-added process activities.
             E-commerce is at a crossroads. For many suppliers and distributors, EDI has become the backbone for computerized B-to-B communication. Meanwhile, Internet has brought universal access and has become a host of new technologies. The danger is that the benefits of electronic commerce standards such as EDI will be swept away by the excitement of the Internet, leading to potential incompatible practices among suppliers and distributors.
             CPFR intends ...