If you’re like most companies, the pace of product innovation has been accelerating. I’ve talked to many companies that indicate that it now takes longer to market and sell a product than it does to develop it.

In many companies, new product introductions represent the single biggest demand management challenge they face. Given that forecasts can often include 70-80% errors for new product introductions the supply chain management challenges are significant. Improving forecast accuracy is certainly one objective.

But will forecasting ever be perfect? It’s doubtful. Realizing this doesn’t mean you’re failing, it means you have an opportunity to proactively do something about it. Ensuring that your organization can quickly sense true demand and quickly respond to changing demand and supply situations is the key to being able to capitalizing on the opportunities that new products represent.

There are critical timing decisions to be made about the proper effectivity date - a date that balances meeting demand with the need to avoid excess and obsolete inventory problems. There is also a critical need to be able to rapidly align supply with the true demand as it materializes in the early stages of product ramp up. None of these things can be perfectly forecast.

Developing a competency in responding to change is essential for companies to deal with the realities that exist in supply chain management today.

This entry was posted on Wednesday, September 12th, 2007 at 4:31 pm and is filed under Best practices, Demand management, Response Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.