By John Sicard, vice president of services

In 1992, Peter Drucker wrote an article that was published in the Wall Street Journal called “Planning for Uncertainty”. In this article, he said:

“Uncertainty—in the economy, society, politics—has become so great as to render futile, if not counterproductive, the kind of planning most companies still practice: forecasting based on probabilities.”

Peter was likely one of the first to recognize the significant shift in consumer buying patterns and the resulting implications to how manufacturers run their businesses. For many manufacturers, the ability to predict your demand using mathematics was going to be a thing of the past, if it were ever a “thing” to begin with. There certainly is enough evidence to support this position in the high-tech consumer market, where products vie for the fashion of the day, and usually only have a couple of quarters to do it in before the latest-and-greatest hits the street.

Stephan Haeckel coined the phrase “sense and respond” late in the 90’s, and drew attention to the growing trend that business performance would soon be governed more by a organizations ability to respond to unpredictable change then it would be through forecasting. In his article “Beyond Demand Forecasting: Sense and Respond Organizations” (free registration required) under the paragraph heading “From Forecasting to Anticipating Customer Needs and Preferences”, Haeckel states “Sensing and responding to individual customers’ current requests, as opposed to making and selling offers they are forecasted to want entails a transformation–not just a reformation–of what the business is and does.”

Today, we are seeing growing evidence of global manufacturers that ‘embrace change’, and are learning how to leverage their ability to rapidly respond to any changing supply chain condition, either with demand, supply, capacity or product design, and turn it into a competitive weapon. Companies that transform themselves from “make and sell” organizations to “sense and respond” organizations will become tomorrows “great” companies.

TrackBack • Digg This • Add to del.icio.us
Tags: Supply chain flexibility
Posted in Best practices
You can leave a response, or trackback from your own site.