I have taken Northwest Airlines flight 19 to Tokyo several times in the past on my way to Bangkok, but the June 30 flight marked the first time I would do so with my husband, Steve, and our kids Elizabeth (Biz) and Alex. It was a 12-hour flight with three movies, two meals, a snack and zero total empty seats. For all of us, it was the flight that seemed as if it would never end.
The tiny Asian man in front of me reclined his seat to a comfortable pitch for sleeping. As I tried to keep my mind from focusing on the lack of space between his seat back and my kneecaps, my thoughts drifted back to my June 17 post.
I wrote about the bell curve for trend and how it has, as we forecasted in 1999, dropped in length again. This time it is compressing from the four-year mark established in 2000 to three years, which it will accomplish by the end of 2005. What are the repercussions of such a shift? At least two of them revolve around manufacturing and sales forecasting.
First, the amount of forecasting for each product, color or surface lessened. This just makes sense since the life span of the product is shorter. However, the ante is upped considerably on getting the manufacturing and sales forecast right since there is much less time for recovery. If your forecast is light, you could miss the opportunity to maximize the burst of demand that comes with a shortened trend life cycle.
If forecasts have predicted greater demand that actually exists, the profit picture suffers more dramatically than with a longer life cycle. Markdowns will have to be taken sooner and will likely be deeper in order to clear the way for the next product’s arrival.
The Harvard Business Review publication Supply Chain Strategy tackles these issues from as much of a nuts and bolts as a color and style perspective in their April article Creating Demand-Responsive Supply chains. This short article talks about range forecasting to estimate the likely range of demand and create contingency plans for the high and low points. It also addresses testing, something I have always been a big fan of, and how Nine West tests and manufactures a style simultaneously.
The article acknowledges the realities of a shortened life cycle while addressing ways to mitigate the associated risks. It is a short read but well worth it.