7.08.2015

Until the last thirty years supply was almost all push.  Farmers, fabricators, and their trading partners mostly guessed about the size and location of demand.  Products were pushed toward supposed demand... often resulting in either feast or famine.

Today demand signals increasingly pull supply.  But even with the advances of the last generation there remains a great deal of dependence on push.

Late last year the Gartner consulting group found that the "average" consumer product company had an error rate of 21.9 percent on forecasting SKU-level demand one month out.  For new products the average error rate rose to 48.3 percent. Intuition can be about as good.

Even well-above-average performers were off by at least 11 percent on most products and 34.7 percent for new products.  Given these gaps, procurement -- and even more, sourcing and production -- typically continue heedless of projections.

Supply networking differs from logistics most when demand information drives value across the whole source-to-consumption continuum.  There is still a long way to go in terms of accessing and assessing demand data then building supply processes around the pull signals.

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