In this week's episode Tony Hines discusses predictions and the unpredictable. Forecasts are built on the premise that the future is a continuation of the past. Data are gathered about previous performances and projected forward to give a forecast. If you have line items that are fairly standard and demand is stable then forecasting techniques are very useful but what if demand is more unpredictable? Reasons for why we assume the past is continued into the future are almost hardwired into the human psyche. In a wide ranging discusion examining reasons why this is natural arguments are advanced to explain and understand why we should be far more questioning if we want to understand forecasts and why predictions rely far more on assumptions than data alone.
To paraphrase Roald Dahl this is a tale of the unexpected. We should always think about the unexpected as the norm. Not many things in life go exactly to plan so why are we so surprised when things go wrong? If you are a supply chain professional you know with some certainty that something is likely to disrupt the best laid plans. The response is what matters. What can you do to put things back on track quickly? This is why there is much talk about resilience.
For all those students of supply chain along with professionals that spent hours playing the ‘Beer Game’ you know that disruption is normal. You also have learned from the experience and know that to correct disruption and the causes of it often makes it worse given the actions taken to make adjustment to flows within the supply chain. In other words it is not simple. It is complicated. Would a simple algorithm solve the problem?
The Science of Prediction
If you follow professional sports you will know that the bookies favourite does not always win. This is one reason we like it. In our sporting lives unpredictability makes it exciting, exhilarating and a unique experience. We love the fact that you cannot be sure of the prediction. Why then when we return to our working lives do we expect things to happen as planned? Should we just learn to accept it as a matter of fact and not be too concerned? After all isn’t an exciting, exhilarating and unique experience attractive to make our working lives better?
Listen to the episode to find out more…
Also in this episode find out why container freight costs have increased by 400 per cent since 2020, get an update about the fire onboard a container ship near Columbo, Sri Lanka and find out why the Evergiven is still stuck in the Great Bitter Lake in the Suez Canal.