While at the AMR supply chain executive conference someone shared a story that they attributed to Dr. Hau Lee at Stanford. The story goes something like this.

Some Volvo executives were walking a lot and noticing how many green Volvos were sitting there collecting dust. They asked the local manager why there were so many green Volvos. The manager replied that the green Volvos just weren’t selling very well, so they had excess inventory piling up. The executives suggested a promotion to get rid of the green Volvos and clear up the inventory. The local manager put together a promotion and, sure enough, they started to sell the green Volvos. The production folks noticed this, and promptly started to manufacture more green Volvos to support the growing demand.

The lesson here was clearly one of poorly coordinated activities and, in this particular case, came in the context of a sales and operations planning (S&OP) process that clearly lacked appropriate participation and coordination. AMR talks a lot about the intersection of demand, supply and product. This intersection is at the heart of a good Response Management process as well, since the only way you can effectively respond to a change in any one of these is to understand the impact and interactions with the other two. This is one of the reasons why the Response Management process is so people-centric. It’s about figuring out the right tradeoffs and course corrections to make in the face of unexpected change – maybe a last minute order drop-in that supply was never planned to support. Engaging the right people from across the organization that have the specific domain expertise and insights to help determine the appropriate response is critical to any Response Management process.

TrackBack • Digg This • Add to del.icio.us
Posted in Best practices, Response Management
You can leave a response, or trackback from your own site.