All I want for Christmas is….well, not a long-range forecast

Published August 5th, 2010 by Lori Smith 0 Comments

To rely on the forecast or not to rely on the forecast– that is the question:
Whether ’tis nobler in the mind to suffer
The slings and arrows of volatility and risk,
Or to take arms against a sea of troubles
And, by reacting swiftly, end them. To be agile, to be caught off guard
No more – and by a quick response we manage
The heartache and the thousand natural shocks
That the forecast is heir to…

Ah, enough of that….There is a great article by David M. Katz in CFO magazine about demand planning leading up to the holiday season. With all the talk of a double-dip recession, CFO’s are asking themselves do they ramp up for growth or hunker down and wait out another drought? 

Ultimately, the question is – how and what do you forecast?  There are risks on both sides if you get it wrong – excess inventory or missed sales opportunities.  As such, at times like these where there is little to no predictability, experts are now saying that the ability to respond and react to demand is more critical than the ability to forecast/plan it.  Can I hear a hallelujah!

As the article points out…

In these volatile times, it’s hard for companies to get a reliable read on what to expect from their customers and how to deal with rapid shifts in demand. Here are four steps that supply-chain experts say are essential to coping with a fast-changing economic landscape:

1.Ditch the long-range forecasts.

2. Avoid gut feeling.

3. Go granular.

4. Launch an S.O.P.  

Any other steps that should be included?

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