My answer to How can I predict demand in Business?
Answer by Desmond Last:
Facebook, Amazon and many other large multinational companies are now going to great lengths to ensure they create the demand. Using Data Mining they will ensure you are targeted with products and services you are likely to buy. They will in effect control your buying patterns and be able to predict demand not from the past but from the future.
It used to be that the Ford Motor Company knew from historical data they would sell x cars – their baseline. They knew they would sell x + 1; their consumer demand variability and they knew if they run a sales campaign they will sell x plus 2.
Now Data Mining is the new Guru.
Amazon want to be able to send you product information knowing that x probability will calculate that you will buy it. Amazon is then able to predict inventory levels and supply chain logistics.
But Data Mining has a bug in the system, That bug is called Climate Change.
What they do not know now is how climate change will affect their sales. They no longer have historical data on which to base future sales predictions. Data Mining as yet does not say x people will buy nothing for 3 months as they recover from a flood or bushfire.
Last winter the Carr's Biscuit Factory was flooded. Its biscuit baking oven was damaged in the Floods. It took 3 months to build a new oven. During that period they could not make the biscuits. The demand was met by another company. They had no historical data for the increased flooding.
When the supply chain is flooded, or on fire, or the workers can’t work, as they have all been evacuated, what will Amazon do?
What will Ford do when everybody suddenly wants four wheel drives to escape the floods? What will Ford do if car insurance companies will no longer insure car in flood areas and everybody buys used? Data mining or historical analysis will not be any use then.
Globalisation was fine as long as the world was not flooded or on Fire. But now distribution and manufacturing centres that are a long way from the delivery point may not look so good.
Drones that deliver parcel may be ok on a nice day. But what happens in a 30 knot wind?
Data mining is the new answer to predicting demand – you create it. Those that do not have access the the data sets use historical data.
But like it or not Big Business is going to have to start asking questions about Climate Change or one day Wall Street will ring its death toll for them.
How can I predict demand in Business?
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