Introduction:

Distinguishing supply chain efficiency is through longer lead times with high set up costs, and large lot sizes that allow firm to produce or buy low unit cost at the expense of market receptiveness. Where a responsive supply chain, allow short lead-times with low set-up costs and small lot sizes to adapt quickly to changing market demands but frequently at a higher unit cost. Some firms organize collaboration with their contractors and suppliers to improve their supply chain structure to gain competitive advantage in their industry by increasing profits, and balance their supply and demand.

Forecasting with Suppliers:

Lawrence et al. (2009: p. 98 - 99) stated that lack of information sharing triggers firms to optimize own supply chain operations and performance to effectively match supply with demand by collaborating with their suppliers especially for the case of short life-cycle products. Lawrence et al. (2009, p. 99) supports the view of Aviv & Zhao (2002) that through collaborative forecasting, supply chain will improve and most likely achieve the benefits of increasing responsiveness, risk reduction, and lower inventory costs, hence, increase profitability and business performance.

Småros (2004) classified two categories of forecasting collaboration; modeling based research, wherein, retailers and suppliers share downstream demand or inventory information, and the other category is empirical research focusing on one collaboration model such as CPFR (Collaborative Planning, Forecasting, and Replenishment) process supported by VICS (Voluntary Interindustry Commerce Standards). The CPFR model is composing of nine steps model (VICS, 2002):

1. Developing Collaboration Arrangement. 2. Creating Joint Business Plan. 3. Creating Sales Forecast. 4. Identifying Exceptions for Sales Forecast. 5.