Date: August 4, 2022 - The business models of more than USD$2T of consumer sales in North America under siege from conditions not seen in a generation or more. This has revealed that forecasting and planning pre-COVID do not work well today. The changed environment will force tough choices from management. This post considers unforeseen changes, and then suggests 5 alternatives for enterprise actions.
Background:
Manufacturers who were committed to the strategy of Just-In-Time are now experiencing bottlenecks for high-value goods (e.g. vehicles, airplanes, plant equipment, new residential construction).
Cost increases uncertainty for CFOs. As a result, CFOs are now searching for far higher rates of return on any expenditure – or their money back. What looked like a good experiment a year ago, could look like an expendable venture today.
Shifts in demand from consumers driving industrial demand including energy, transportation, computing, and global food/agribusiness.
Consequences:
These are resulting in logical consequences not predicted, forecasted, or planned for:
1) “Models” (predictive or analytical) of consumer behavior have become less reliable produced by Big Data, AI, or Data Science.
2) “Economagic” (analysis of what has been to what is) forecast less reliably due to shifts in flows, goods, and costs of logistics.
3) “Transitions” (governmental and cultural shifts) for climate change, demographics, and resources encounter unexpected leaps in correlated or causal relationships. (Increased costs of fossil fuels change the renewable rewards while renewables see costs increase due to resources and inflation).
Tactics to cope:
A) Stop analyzing and just react
B) Analyze better to produce more reliable predictions
C) Invest in agility (to be reactive faster)
D) Hide (stop spending or investing for now)
E) Take the money and run
Enterprises will see these choices again and again – choosing is a problem and how to choose is the question.
If you’re reading this, you may be able to decide which of these tactics to pursue. EkaLore has staff centuries of experience. Or in other words “Been there, Done that”, if you are facing some tough decisions and you’d like to bounce something off one of our senior analysts (for free and confidentially of course!) – Send us a note at sales@ekalore.com
If you’d like to read other thought pieces from EkaLore www.ekalore.com/blog-1
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