20 Apr 2010. Catastrophe strikes 42 miles SE of Venice, Louisiana. Historic BP Oil Spill. Duration: Unknown.
BP engineers sweating to seal the oil leak. Gulf coast economy experiencing a ‘free fall’. Close to 1 million projected job losses in the next 5 years. Closure of gulf waters fueling the price-increase of local sea food produce. Ripple effect extending to related supply chains. Gulf coast goes Bust!
11 Jun 2010. FIFA 2010 World Cup frenzy in South Africa. Duration: 1 month
31 days of non-stop festive mood. “Tsaminamina – waka waka” setting a rage on youtube with 35 million hits. 2 Million fans rejoicing. A free flow of traffic and alcohol driving the emergence of a nation into the 21st-century-competitive-economy. South Africa economy finds a Boost!
What’s the connection between these two radically different events in completely two different geographic co-ordinates? The answer is a common underlying supply chain theme, the so-called demand catalyst “TREND”.
Now, how does the Gulf spill affect the demand dynamics? A regional disaster such as this oil leak curbs the inflow of tourism and subsequently the other related economies, further triggering a potential displacement of approximately 2 million workers. In the shorter time frame, federal closures and damages constrain the seafood supply. In the longer run, considering the fact that the gulf coast contributes to 2% of the global seafood consumption, the demand for gulf-sourced food chain might continue to diminish due to potential concerns and apprehensions on seafood safety and marine toxins.
Speaking of FIFA 2010, the influx of tourists means an increased demand for travel, lodging and recreation. An organized entertainment such as these are a cradle of opportunities to shower enough demand upticks to multiple business lines.
While the gulf spill augurs a supply-scarcity, the downstream consumers (restaurant industry, for e.g.) can handle the sourcing challenges if they manage their supply chain operations efficiently by considering alternative origins of sourcing safer seafood. It’s all about managing the supply.
On the other hand, events such as World cups can be a great profit-ride for numerous businesses if their operations are run efficiently, catering to the demand-upswings, through smart logistics and inventory planning. However, the risk to be kept in mind are potential event cancellations that can lead to inventory liabilities due to lost sales. It’s all about managing the demand.
Bottom-line, Demand Management and most importantly Forecast Accuracy is all about managing the demand patterns that repeat and the ones that do not. While seasonality accounts for a recurring pattern of demand fluctuation, Trend does not. To take advantage of this informational wealth called ‘Trends’, companies need to institutionalize a quantitative forward-guidance process facilitated by the sharing of real-time DATA across the extended supply chains, actively supported by transparent COMMUNICATIONS across all the Trading Partners, enabled by less-intrusive TECHNOLOGY platforms and powered by the INTELLIGENCE from business-rules based PREDICTIVE ANALYTICS.
