This article, in my mind is really about business and the readiness of today’s supply chain to meet unexpected demand. Supply vs. Demand meets Risk vs. Opportunity.

Michael’s death, because he was the “King of PoP” has brought the spotlight to a myriad of discussion from family issues to business issues, legal battles, media issues and in the twitter, facebook, networking age, his name will no doubt be typed/hyped more times than his famous “Thriller” record setting sales transactions.

Are we really ever ready for something like this? Fame and media have created a new wave of demand where it was only among the completely devoted in the most recent of demand streams.

I need to preface that I really respected MJ’s work and talent, and not being very big on the entertainment scene, was skeptical as I always am, about reports that are designed to just get attention/ratings, but having said ALL that (sorry) back to the main point of the article and my reply:

All of the best demand planning models sum back to depend on two things… History and calculated risk. Safety stock is a function of calculated risk. We hold safety stock based on the cost of our risk of inventory position, value of the customer’s order base plus potential sales (promos?) and variability of true demand. We balance our value of service level and liability, while attempting to do the same with our partners to assist them in the same end. Above that, our risk tolerance, flexibility, creativity and ability to keep our view on the pulse of the immediate future determines our ability to meet sudden demand spikes.

We are now in an economic phase where planning is more essential than ever and needs to take place even futher in advance. In the recent past, many a manufacturer was willing to take an inventory postiion for a good customer in good faith of the future business. Today, risk tolerance has become nearly Nil and in the process, many of us have eliminated the prospect of supplying the “opportunity”.

So… what is the best reaction, when something phenomenal happens suddenly, unpredictably and on a large scale?

IMHO the best reaction is proaction in the past. Manufacturers and retailers are bringing their inventories to the bare bones in an effort to revive stock prices and security. To this end, we are hurting the consumers, laborers, investors and the lifeblood of our economy. There is no opportunity where there is no risk.

For those who are keeping risk in check, only agility can keep you afloat. Watch and plan for the opportunity. Put out the feelers to the real global economy = begins with the consumer whose attention is in the highest demand and their discretionary dollar evaporating. Be ready to turn on the dime.

I was saddened by Johnny Cash’s death and also Keith Moon and John Entwistle from the Who. Sandy Denny of the Fairport Convention left a huge void. The Boss will probably outlive me by decades, so that’s no problem, and ditto for Lucinda Williams who just may live forever. 🙂

That said, I think some of Anish’s comments demonstrate the degree to which the world of entertainment and the world of business are becoming entwined. That, among a number of other things, are making business more complex and subject to increasing rates of change. Executive S&OP plays a role there, because it’s all about change. If things never changed, you wouldn’t need S&OP. However, in today’s world, I’d hate to try to run a medium to large business without it.

Cheers,

Tom Wallace

Michael Jackson was a phenomenon in music and entertainment. He was a great entertainer and delivered great joy and enjoyment to many people of all ages around the world. (I still remember how much my children, my nieces, and their age peers enjoyed Thriller when it was released. It was a thriller in every sense of the word.) His death is a great loss, and he will be sorely missed for his great music and dancing, and for his many contributions to Pop Music.

But not only was he a great entertainer, he was also a business and a business person. He was providing products and services that demanded savvy investors, long-range planning and forecasting, competent logistics professionals, well designed and executed financial and business plans, along with all of the talents involved in musical production and distribution. His untimely death was truly an outlier in expectations about the future, occuring at the very moment that his was getting ready to undertake a major program (the 50 event series in London) for which he was to be paid $1 million per performance. That is a cashflow stream that was planned to partially address a capitalization issue that he was facing – $400 million in debt combined with many high value but relatively illiquid assets. His business advisors and financial advisors were doing many of the same things that we are doing in our professional capacities for the companies for which we work – sales & operations planning, demand planning, demand forecasting, and supply chain management. So, his business situation and his business challenges may have been more similar to those of our business experiences than may necessarily be obvious at first. Like Apple where there is concern of its future if something were to happen to Steve Jobs, there is great trepidation about the future of the Michael Jackson music business enterprise and its future in his absence.

Michael Jackson’s untimely death is a most unfortunate event, one in which his family and his many fans are experiencing grief and a deep sense of loss. While he was a business and business person, most importantly he was a person of great talent whose music and dance have delivered happy and joyful moments many. He will be greatly missed.

Mark Lawless
Managing Principal
Marlaw Business Advisory Services