In November 2022, this happened:
- The Taylor Swift Ticketmaster crash. Ticketmaster, an online ticket sales platform, cancelled ticket sales for popular singer Taylor Swift’s 2023 United States concert tour after its online ticket purchasing system crashed. The company cited “extraordinarily high demands on ticketing systems and insufficient remaining ticket inventory.” Investigations and numerous complaints followed with accusations that the company was behaving like a monopoly that disregarded customers’ needs;
One month earlier, in Manila, Philippines (and similarly in other places around the world), this also happened:
- Apple’s iPhone 14 debut. In October 2022, two hundred (200) people waited in line outside the Apple re-seller PowerMac store at Manila, Philippines, to get their hands on the newly released Apple iPhone 14. Despite a premium sticker price of PhP 61,000 ($USD 1,033) that was way higher than competing smartphones, people from all over the country flocked to Apple re-seller stores hoping to buy the new iPhone model;
And from mid-year 2022 to April 2023, as demand for travel spiked after many countries lifted three (3) years of coronavirus pandemic restrictions:
- A Dutch court overruled a plan by Schipol Airport authorities at Amsterdam, Netherlands to cap the number of flights per day from 2023 to 2024. The court ruled that airport authorities did not follow the correct procedure and should consult all affected parties. The Dutch government wants to limit the number of flights through their international airport to minimise noise and environmental pollution although airport authorities have also complained about staff shortages and long passenger queues. Airlines have opposed the flight cap plan citing their commitments to meet climate change standards. But the real controversy is demand. Passenger traffic at Schipol spiked in 2022 and any cap would disrupt airlines’ abilities to serve surging global travel traffic which is expected to increase in 2023.
When demand for products & services and enterprises are unable to fulfil that demand, clamour occurs. Customers cry out. They get angry. Suppliers scramble to serve whatever they can. Systems crash. Everyone comes out frustrated. Promises are made that it won’t happen again. Only that it does.
Clamour is a common occurrence for many products & services:
- A highly reputable law firm stops accepting new clients because it did not have enough attorneys or staff to accommodate new cases;
- A pharmaceutical firm comes under public pressure as it runs out of stock of a critical prescription drug that doctors & patients found effective for weight-loss and diabetes;
- Supermarkets and vendors run out of eggs due to consumers’ fear of possible price increases;
- Real estate brokers are frustrated searching for warehouses for clients seeking storage for their products;
- A small-business metal fabrication enterprise works around the clock to finish orders for stainless steel pipes from several construction contractors who want the items immediately.
Clamour is demand in which customers seek items or place orders which cumulatively exceed the suppliers’ capabilities. Customers insist on obtaining items even if suppliers tell them they can’t fulfil what they want or need in the time they ask.
Clamour is a dream come true for marketers and entrepreneurs, but it can and is a nightmare for the demand fulfilment professionals.
From 2020 to 2022, multinational industries cited supply chains as a key reason for delivery failures. Just about every industry—automotive, aerospace, agricultural, appliance, construction, consumer goods, telecommunications, and logistics—blamed supply chain problems for shortages or delays in product availabilities. Economic analysts pointed to issues such as the coronavirus pandemic and the Russian-Ukrainian war as underlying reasons for supply failures.
The same analysts also mentioned surges in demand for products & services that outstripped supply. Pent-up demand from consumers emerging from coronavirus pandemic restrictions had resulted in clamour for many products & services. Industry leaders responded by promising that they’ll improve their supply-side operations.
Our job as supply chain professionals is to fulfil demand we can capably satisfy. We evaluate orders before we accept and deliver them. We study the market and forecast what our customers will buy. We plan with marketers & salespeople to determine how much to invest in additional capabilities. We build inventories and we schedule production or operations to ensure availability of items. We hire additional people to safeguard the quality of our services.
But when clamour occurs, reality sets in. We run out of items and materials. Delays happen. Systems collapse. We get stressed and we burn out. Customers complain and insist we fulfil their demands.
No matter how much planning we did, clamour overtakes our capabilities to deliver.
Clamour occurs when we underestimate demand. We either failed to forecast accurately or we just didn’t want to accept the probability that whatever we’re marketing would sell better than what we expected.
Whether we are executive or entrepreneurs, we hesitate to complement on capabilities we fear might not be utilised. We hire only enough staff to save on salaries. We are reluctant to put in more money for new machines. We are afraid to stock more inventories which may end up expired or obsolete. We don’t want to risk not getting the returns from whatever we invested in.
Instead, we push ourselves beyond our limits to accommodate the clamour. We work overtime and weekends. We defer preventive maintenance to maximise uptime of our machines. We push our vendors to deliver more materials and earlier than we originally requested. We get stressed.
We often blame our supply chains for their inability to accommodate clamour. Never mind if the demand exceeded supply. We could do better. We should have done better. We make promises that we will do better. But that’s a mistake. Because we can only do so much if we didn’t plan for it in the first place.
We don’t realise that there are two (2) sides to addressing clamour:
- Having enough supply for it;
- Anticipating it.
Clamour happens as a result of failure in demand forecasting just as much as it is a result of not having enough supply for it.
Overcoming clamour requires the ability to forecast demand accurately just as much as it requires the versatility to supply.
Forecasting demand entails predicting what our customers will buy. Some enterprises forecast via mathematical algorithms using historical data; in other words, they make calculated guesses. A calculated guess is an oxymoron—two words in conjunction that contradict each other. We can’t calculate a guess and vice versa. Forecasting via calculated guessing just leads us back to where we began: uncertainty.
We also muddle forecasts with sales targets such that we present numbers which estimate demand that would likely be much lower than what customers will really buy. Many of us don’t want to over-commit targets even if forecasts in the first place aren’t targets but predictions.
When we have very wrong forecasts, we end up with very wrong supply plans. As the adage goes: garbage in, garbage out. The plans we make to supply demand we wrongly forecast turn out to be of no value. And often, it would turn out, we supplied too little for demand we should have known would be higher than what we forecasted.
It’s true we can’t predict the future and we can’t expect demand forecasts to be accurate. But we should also recognise that getting an idea of how much customers will buy sometimes just needs some common sense.
Customers, for one, are our best resource to predict demand. If we want to know what customers are going to buy (or what they prefer to buy), we should, simply ask them. It’s a bit illogical to rely on algorithms and so-called calculated guesswork when we can simply ask our customers what they plan to purchase.
If we worry that there are too many customers to ask (such as in fast-moving consumer goods), we can always ask a few from the different groups we are selling to. We can sample and extrapolate via basic statistical tools. Statistical tools allow us to estimate what a population would prefer based on the trends of a sampled few. These tools aren’t rocket science that need artificially intelligent (AI) complex algorithms; they’re formulae based on math we can understand.
Forecasts are also not sacred cows that we can’t change. We can revise them as often as we like based on new information that come our way. It’s sensible to update our demand forecasts when we get new customers and what & how much they plan to buy. If our customers are opening new store branches or expanding to new territories, we of course would find out how big the expected demand would be. We’d ask the people who we’d be selling to.
We plan supply based on what we forecast. Forecasts are predictions which we use to anticipate, i.e., calculate contingencies, buffers, and allowances. We set inventory targets from forecasts and we in turn schedule production & operations.
We can build up large inventories of items (such as for commodities) when we forecast speculative swings in demand in coming months. We also can invest in high-capacity machines and assets, and hire & train extra staff, to respond quickly with needed operational capacity without having to stock expensive inventories.
But we don’t do this. We instead welcome the clamour and do what it takes to fulfil it. Never mind if we don’t have the immediate capacities, we’ll just work overtime or schedule extra shifts on weekends. We’ll hire temporary workers and lease needed equipment. We’ll do whatever is needed to deliver the orders.
We accommodate clamour because we fear a backlash from customers that may harm our reputation and compromise our share of the market. We also desire the potentially high windfall revenue that comes from it. It’s what we’d coin the “good problem,” a situation where we’re getting more demand that’s challenging our means to deliver.
Clamour is the result of poor forecasting which leads to poor supply planning. We can improve our forecasting and our supply planning but we don’t, because we somehow believe we can tackle the clamour as it comes. We don’t realise we have our limitations, more so in the supply chains we manage and depend on.
Just as much as forecasting can never be 100% accurate, we can anticipate demand and head off the clamour by simply becoming familiar with what our customers will likely buy in the near future. And we can update the information as the preferences change.
Clamour is a phenomenon that we may think is a good problem. But just like calculated guesses, a good problem is an oxymoron—a contradiction that really means a problem that isn’t good.
We can do better before clamour comes. But only if we plan better via common sense forecasting and building our capabilities.