The most common critical element is effective and strategic planning process. More than often, a good plan entails a thoroughly structured process. In the CPFR model, trading partners share different viable market plans. Upon reaching at a consensus on the exact timing and planned sales of specific products, they commit themselves to closely following the plan, which is then used to create a forecast. The forecast is then availed to the partners via the internet. Rudberg et al (2002) suggests that by incorporating concerted supply chain facilities trough an electronic market place, companies can merge together and have this information shared amongst each other, with no implementation of costly Electronic Data Interchange networks. Jadger and Thoben (2001) pointed out that the old-fashioned procedure of business exchange was under transactional relations with limited information sharing, placing the CPFR model at an advantage (Harrison & Hoek, 2008).
Demnd and supply management is another element. Consumer purchasing power and forecasts at retail level among the trading partners should be carefully monitored for easy management of supply chain activities. From the data obtained, the manufacturer analyzes whether or not it can meet the forecasted demand. If it cannot, then it collaborates with the retailer to arrive at a mutual forecast and develop an execution plan. Caridi et al (2006) scrutinized that in the CPFR model, process begins with retailer agent, who collects data from point of sales and come up with demand forecast.
Execution of carefully made plans is also a critical element of collaborative planning. It is achieved through the Fulfillment process, which aims at getting the product into the consumer’s hands. The retailer offers a range of options for availing the products to the consumers and choice depends on cost and market influences. A dynamic, adaptable planning facilitates smooth execution.
Finally, an analyssis of the overall collaborative planning is also an important element. Basing on experiences, iterative improvements should be made. The effectiveness of the efforts applied should be analyzed and if found wanting, appropriate adjustments should be made. An applicable example is seen in the Wal-Mart Company. The Company came up with an initiative with P and G in which managers coming from the two companies in cooperation estimates sales of P and G products in Warl-Mart stores and ten jointly plan replenishment strategies (Harrison & Hoek, 2008). This makes sure there are fewer margins between Wal Mart’s sales and P and G’s produce.
In conclusion, it is important to note that strong rivalry makes companies to be involved in supply chain alliance with their upstream and downstream associates (Bititci et al 2004). The benchmarking organization used to examine status quo of supply chain collaboration among the trading partners, identify their performance and systemize improvement initiatives.