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Will Forecasts and/or Predictions Benefit The Alignment of Your Priorities and Your Supply Chain?

This morning I read an article that addressed the use of forecasts and predictions to understand the future of retail. Although an interesting read, I take exception to understanding forecasts and predictions as one in the same.

To me a forecast is a method to calculate future performance based on an analysis of varying factors and patterns.

I believe a prediction is foreseeing an outcome based on deductive logic or beliefs, rather than a calculation.

On forecasts I fully agree. The past is:

  • Past
  • Useful as a backdrop of the future, but not a predictor of the future
  • A great indicator of the future, given no breakthroughs take place

Forecasts are never going to be 100% accurate, but predictions are even less accurate. However, when predictions are accurate they can be a game changer, so I see predictions as being more strategic whereas forecasts are more tactical.

The key with predictions are:

  • The closer the prediction (what will happen tomorrow vs. what will happen in three weeks) the greater the chance for accuracy.
  • The credibility (past performance) of the predictor is an important factor in determining the accuracy of future predictions.
  • Predictions of most importance are the ones that tell us about shifts that will occur that are game changing. Predictions that “Things Will Remain the Same” (TWRS) have little value. In fact, one should not predict TWRS, they should forecast that.

As predicted, Alibaba is a big deal. To better understand Alibaba and Jack Ma The Alibaba Effect video outlines the growth and history of both Alibaba and Jack Ma. Alibaba has 80% of the online business in the largest eCommerce market in the world, China and Alibaba will introduce us all to cross border trade (XBorder) and the importance of marketplaces and it is possible to simultaneously operate B2B, B2C, O2O, and C2C. I understand that for Jack Ma to achieve his ultimate dreams he must build a major US ecommerce business. Jack understands this as well, but he also understands priorities and his priorities are:

  1. Maintaining his #1 position in China eCommerce
  2. Growing and maintaining his #1 position in XBorder trade
  3. Growing his US business

Jack Ma continues to pursue his priorities; I forecast he will stay #1 in China eCommerce, I forecast he will stay #1 in XBorder trade, and I predict he will evolve into a leadership position in eCommerce in Russia, Brazil, Europe, and the United States. But as one of Jack’s favorite quotes says, “Be fast like a rabbit and patient as a turtle.” At this point Jack is fast in China and XBorder trade, but patient elsewhere.

How clear are you on your forecasts and your priorities and what do you predict about your supply chain and your future?

More Resources:

Jim Tompkins

Jim Tompkins is an international authority on leadership, logistics, material handling, outsourcing, and supply chain best practices. As the founder and CEO of Tompkins International, he provides leadership for Tompkins globally. He has written or contributed to more than 30 books. Jim has been quoted in hundreds of business and industry magazines such as The Journal of Commerce, Supply & Demand Chain Executive, and FORTUNE, and he has spoken at more than 4,000 international engagements