Reading Time: < 1 minute

When I was in business school, during our first week orientation dinner event, we did a group exercise.

I forget all the details, but we broke out into groups of five or six.  Each person was assigned a role representing a function in a company – marketing, sales, purchasing, inventory management, manufacturing, etc.  The leader of the exercise would give the front of each organization the actual sales number for that period.  And then each function had to deliver a single forecast to the next function in the organization without communicating or discussing any additional information, ending with the manufacturing function who had to decide how many units to produce.  And this was repeated for a number of periods.

The gist of the exercise was that the actual forecast went something like 10,000 units in the first period, 11,000 units in the second period and then 10,000 units for every remaining period.  

However, this singular and relatively small change, generally produced wildly fluctuating forecasts throughout each team.   I mean laughably huge, seesawing projections for changes in demand that totally disrupted the organization.  Some organizations would produce no units in some periods, have stock outs in some periods, or end up with triple the amount of inventory required by the end of the exercise.

I feel like COVID just did that to the world’s economy.  And we will be living with wild fluctuations, supply chain disruptions, and asset dislocations for some time.