Apr 11, 2010 | Demand chains, Management, Operations
Developing a forecast of what you need to make to sell is a different proposition to doing a demand forecast, it is much more than a semantic difference.
A forecast is usually an extrapolation, sometimes very sophisticated, but an extrapolation nonetheless, of the past, and the only thing we know for sure, is that the future will be different.
A demand forecast looks at the drivers of demand, essentially looking backwards through the supply chain from the customer, and anticipating the level of demand by factoring in all the things that drive the customer to order a volume of product in any given period.
ERP systems are driven by forecasts, they are the core of any system, and the more accurately the forecast, the better the system works within the limitation of the rules written in. However, when the forecasts are informed by the drivers of demand, not just the inventory levels and automatic restocking rules in place, the value that can be delivered in vastly enhanced.
Mar 31, 2010 | Alliance management, Change, Demand chains, OE
It seems that everywhere there is a drive to collaborate, without any real regard to the challenges of collaboration, the behavioral and cultural changes necessary for success. Collaboration has become an end in itself, rather than a strategy that has the potential to deliver value to both parties under the appropriate circumstances.
For a collaboration to be successful, there are two pre-conditions:
- There is a genuinely important shared goal, and the goal is powerful enough to drive resource allocation decisions in both collaborators
- The reward systems of both parties recognise the importance of achieving the goal.
Without these two preconditions, there is little chance of the collaboration doing anything more than take some time, probably cover someone’s arse, and perhaps give the appearance of something useful happening.
Jan 7, 2010 | Demand chains, Management, Strategy
Alliances form because organizations have similarities, and commonalities that promise synergy.
However, most alliances fail because they fail to manage the areas if dissimilarity.
Leo Tolstoy remarked that happy marriages were the result of the manner in which partners dealt with incompatibility, not how compatible they were.
It is the same in a commercial alliance, the literature is full of examples of alliances of one sort or another that emerged because of the prevailing logic of moving into adjacent market areas by merger or take-over, based on seemingly common customers, technologies, channels, or philosophies, only to find a disaster waiting because they failed to see how some dissimilarity that had not been considered relevant threw a spanner in the works, and cost the alliance.
After the synergies have been identified and quantified, but before the deal is done, have a separate group look for the areas where there are no synergies, where the organisations differ substantially, and assess their impact on the potential for disruption of the alliance working as well as the optimists predict.
Jan 5, 2010 | Demand chains, Innovation
Evolving a demand chain requires great resilience from all parties involved, it is new territory every time it is addressed because all situations are different, and developing a set of rules for implementation has not yet been done well, almost not done at all.
A key is resilience.
What is resilience? The best definition, and one that applies in these circumstances is by Gary Hamel who defines it as “the ability to dramatically re-invent the way you do things in the face of changing circumstances”.
A good definition for when considering a demand chain initiative, as it is inherently a dramatic reinvention of the way things are in most industries.
Dec 17, 2009 | Demand chains, Leadership
Turning a supply chain 180 degrees to become a demand chain is an inordinately difficult organizational challenge, not because it does not make sense, but because it requires organizations and the people in them to be able to see what has always been there, but from an entirely new perspective. The power of the common view, the accepted wisdom, the status quo is never more powerful than when it is under threat.
Seeing what has always been there with new eyes is extraordinarily hard to achieve in a single business, reversing a supply chain to become a demand chain requires that it is done for a series of businesses, all pre-occupied with their own challenges.
This is why if you can do it, the pay-off from the competitive advantage that will come is immense.
Nov 22, 2009 | Demand chains, Management, Operations, Sales
If you want a prediction, go to the lady in the tent at the local fair.
If you want a forecast, talk to those who have an intimate knowledge of the drivers of the outcomes you are seeking to forecast.
Good forecasting is an iterative process, the more you do, the better you get, so long as you understand why the forecast is (almost) never right on each occasion it is done. Continuous improvement techniques are the core functions of good forecasting.
Forecasts are also improved when you leave aside some of the algorithms that manipulate the past into a forecast, and look instead at the drivers of demand, sometimes a qualitative input, to get a better picture of the sales that may come along. If you are selling ice-blocks, it is useful to look out the window to see how hot it may be, and factor that into forecasts, not just rely on sales over the last few weeks.
