Will Forecasts and/or Predictions Benefit Your Supply Chain?
The Alibaba Effect

RALEIGH, NC – 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:

About Tompkins International:
A supply chain consulting and implementation firm that maximizes supply chain performance and value creation. We enable clients to be more profitable and valuable, while also becoming more agile, flexible, and adaptive to the marketplace. Tompkins collaborates with client teams to develop improved operations strategies, supply chain planning, and execution across all the Mega Processes of supply chains (PLAN-BUY-MAKE-MOVE-DISTRIBUTE-SELL). Tompkins is headquartered in Raleigh, NC and has offices throughout North America and in Europe and Asia. For more information, visit: www.tompkinsinc.com or https://tompkinsventures.com/.