Limitations of Software

Morgan Stanley puts out an index of truckload volume. In early December 2013, for the shipping index was higher than it was ever been in that period of December. This occurred during a period of apparent lackluster retail growth. Morgan Stanley guessed the reasons for this increase were advanced buying for 2014, bad weather delaying shipments to early December, and a late Thanksgiving creating a compressed holiday shopping season.

Let me add one more guess to this list. Software which incorrectly forecast demand. Slow sales in September and October may have lead to not enough inventory in the pipeline to serve November and December surge demand. Remember the software is biased towards minimizing inventory costs.

There is a lot of literature on the value of software to plan your operations and forecast your demand. And in truth, no large operation of any volume can be remotely successful without this type of software.  Nevertheless software is made by humans to handle perceived situations. Not all changes can be foreseen in the creation process. I have not seen hardly any literature to help one make a decision when they should question the output. In many cases middle managers do so on an intuitive basis, but it be wise in using any software to recognize its limitations and be prepared to act when those situations occur.

 

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