Executive Briefings

Demand Volatility Remains Top Concern of Supply Chain Management, Survey Says

Demand uncertainty is far and away still the top concern of supply chain mangers, according to a survey by LifeWork Search, an employee recruitment firm. Eighteen percent felt inventory surplus was the top concern, 12 percent voted for inventory shortage, while 8 percent believe lead times are the top holiday concern, and 3 percent chose "other".

LifeWork Search conducted the same poll two years ago, and the results were very similar. Back in December 2010, 45 percent of respondents voted demand uncertainty as the top holiday concern, inventory surplus and inventory shortage both received 18 percent of the vote, 12 percent believed that lead times were the top concern, while 7 percent chose "other".

"The holiday season has been improving year to year since the economic downturn, yet companies are still uneasy with their predictions on consumer spending." says Jason Breault, a specialist in supply chain planning and the managing director of LifeWork Search. "Forecasting still remains a top concern for many organizations, especially for those who got caught off guard by the recession because they did not have a demand planning process in place. An accurate demand plan can save a company millions." According to a survey by the Institute of Business Forecasting, consumer goods companies could save an average of $3.53m a year by reducing the error of under-forecasting by just 1 percentage point and $1.43m a year reducing by the same percentage point in the case of over-forecasting.

Over- or under-forecasting the demand this holiday season can be extremely costly for consumer goods organizations. Back in October, the National Retail Federation announced their 2012 holiday forecast, predicting sales would increase 4.1 percent from 2011. Numbers are off to a good start with Black Friday outperforming the past 5 years in stock market performance, and compared to last year, sales were up 28 percent, while Cyber Monday was one of the busiest e-commerce days in history according to ComScore.

Source: LifeWork Search

LifeWork Search conducted the same poll two years ago, and the results were very similar. Back in December 2010, 45 percent of respondents voted demand uncertainty as the top holiday concern, inventory surplus and inventory shortage both received 18 percent of the vote, 12 percent believed that lead times were the top concern, while 7 percent chose "other".

"The holiday season has been improving year to year since the economic downturn, yet companies are still uneasy with their predictions on consumer spending." says Jason Breault, a specialist in supply chain planning and the managing director of LifeWork Search. "Forecasting still remains a top concern for many organizations, especially for those who got caught off guard by the recession because they did not have a demand planning process in place. An accurate demand plan can save a company millions." According to a survey by the Institute of Business Forecasting, consumer goods companies could save an average of $3.53m a year by reducing the error of under-forecasting by just 1 percentage point and $1.43m a year reducing by the same percentage point in the case of over-forecasting.

Over- or under-forecasting the demand this holiday season can be extremely costly for consumer goods organizations. Back in October, the National Retail Federation announced their 2012 holiday forecast, predicting sales would increase 4.1 percent from 2011. Numbers are off to a good start with Black Friday outperforming the past 5 years in stock market performance, and compared to last year, sales were up 28 percent, while Cyber Monday was one of the busiest e-commerce days in history according to ComScore.

Source: LifeWork Search