Uncertainty Rules the Day this Holiday Season

Dec. 2, 2011
Mixed consumer spending patterns mean cash is still a major concern to companies.

If there’s one thing supply chain managers can be certain about, it’s the fact that demand uncertainty is the top supply chain concern within their companies. When LifeWork Search, a recruitment organization specializing in supply chain planning and procurement, polled its network of supply chain professionals about the 2011 holiday season, 52% said demand uncertainty is the top supply chain concern within their organization, almost three times the amount of any other option.

The number two concern (at 17%) is a tie between inventory surplus and inventory shortage. Another 9% cited lead times as their top holiday concern. LifeWork Search asked this same question last year, and the results are strikingly similar.

Related Articles: Number 1 Holiday Wish: More Demand Certainty

“In order to maintain record profits that many companies are experiencing, they are doing their best to keep inventory as low as possible while effectively managing the demand,” explains Jason Breault, managing director of LifeWork Search. “Mixed consumer spending signals are not helping. As a result, demand uncertainty still remains the biggest threat to seasonal profitability for many consumer goods companies.”

According to Breault, the past three years have made it difficult for supply chain planners when it comes to forecasting. “We are now dealing with a more frugal and experienced consumer. With the threat of a double-dip recession and unemployment still around 9%, it is hard to predict how much consumers are willing to spend in 2011.

“Although spending is trending upward, many of our clients remain uneasy about demand", Breault adds. “Based on the results of our survey, executives are most concerned with demand uncertainty, followed by inventory surplus, meaning cash is still a major concern.”