Nintendo struggles to find supply/demand balance
There was an interesting article here in the Wall Street Journal (paid registration required) the other day talking about the challenges that Nintendo is having balancing supply and demand for it’s popular Wii game console. The article points out that “… Nintendo’s problem illustrates how tough it is for companies to try to predict demand for a product…” The article goes on to describe the delicate balance companies face in choosing to ramp up supply in the face of uncertain demand. Doing so risks being stuck with excess and obsolete inventory whereas not doing so creates stock out situations and the potential for customers to go with a competitive offering.
The essence of the article speaks to the unabating market forces that are creating huge challenges for brand owners and manufacturers alike. The combination of increasingly volatile demand, shortening product lifecycles and the globalization of fulfillment networks and supply chains are creating a significant performance management challenge for companies as they struggle to proactively manage their response to constant change. The negative consequences of not doing this well are poor customer management and satisfaction, excessive inventory and overall operations performance issues.
As the article points out, Nintendo is constantly working to improve its demand planning capabilities, but even under the best of circumstances they will never be able to completely predict their business. This is the case for many companies today. Given this reality, it’s important to complement demand planning and supply chain planning efforts with Response Management strategies that empower people to respond to the unexpected - to rapidly make the right tradeoffs and course corrections needed to deal with the uncertainty that unfolds every day.
