Risk in Demand Planning

The other day I was wrapped in a conversation about speed and it reminded me of a very interesting blog post in the Harvard Business Review I read last year about General Electric applying concepts of Lean Startups to appliance design. The part that resonated with me is the emphasis on speed.

Having worked in several startup situations I cannot overemphasize how important speed is. Speed is not just important in creating, producing and launching products. Speed is important in our ability to pivot from one approach to the next.

Speed is important in delivering service to the customer. Speed is important in your marketing approach. When you are competing to become a player in a new market, or as a competitor trying to take share from a dominant player in a market, you don’t have the luxury of deliberation. You need to make decisions quickly, make changes quickly and, yes, make mistakes quickly.   If you do it right, you will implement what you have learned while your competitor is still figuring out what to do. If you do it right, when your competitor reacts you will have moved on to the next important business cycle. Today we place a lot of emphasis on risk and cost.

So much so we forget the value of speed.  Brad Power says it well in the blog post: “Traditional financial systems are risk mitigation tools, and there is typically no weighting on speed. These systems often don’t calculate how much money is wasted because you don’t get products in front of customers soon enough, or the risk of going out of business.” It isn’t just product design and delivery that benefit from speed. Our supply chain systems are the same way. With global sourcing and long lead times many supply chains are unable to rapidly sense, pivot and deal with demand and supply variability. - 

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