People in the Data
Yet even being more customer-driven doesn't mean that people in the supply chain can't still foul up the forecasting process. As more companies rely on computers to crunch numbers and automatically spit out orders, common sense can get pushed to the background. In the view of Matt Porta, head of the collaborative value chain practice for PricewaterhouseCoopers, much of last year's oversupply in the telecommunications industrySolectron Corp. alone built up $4.7 billion in excess inventorycould have been avoided with a little common sense. Porta notes that Solectron was faced with a situation where key customers such as Cisco Systems, Motorola Inc. and Ericsson were all forecasting growth rates of 40 percent or better. If Solectron had added all of the orders up, they would have known something was wrong: The market simply could not grow at that rate. "There is always going to be a certain amount of phantom demand," says Porta. "You have to be able to apply common sense to the picture."
"There are a lot of tools out there, and they're pretty damn good tools, but they're all dependent on getting good information, and getting that information shared," says Flextronics' Webb. "As always, the human element can't be ignored." Webb also believes it's ultimately essential to bring customers into the process to reduce the challenges that people can bring to the process. "The more comfortable we can make our customers in sharing their information and the closer we can get to initial demand for their products," says Webb, "the more accurate we can get at this."
MEL DUVALL is a Calgary-based freelance writer who has covered the technology and business scenes for more than 15 years. Please send comments on this story to firstname.lastname@example.org.