An Energetic Lunch With Dr. Hau Lee

If you haven’t heard Dr. Hau Lee speak, you’ve missed out on an engaging and passionate speaker. The attendees of the Keynote Address/Luncheon today were treated to a delicious lunch and an entertaining presentation by Lee.

As a professor at Stanford University, Lee is a proponent of “sense and respond” as a critical strategy to keep a supply chain agile. It’s not forecasting, per se — rather, it’s knowing how to feel out subtle indicators that will affect the supply chain, like changing customer tastes or an economic reality that affects demand, and then knowing what do to with what knowledge you find out.

“Sense is not just about sense,” Dr. Lee emphasized. “You have to put common sense into your sense.”

In other words? Know how to analyze data and understand the factors that may be driving that data.

For example, when the Magic Theatres chain opened, one location had a stock-out on hot dogs. No one was prepared for the demand in this location. The demand driver turned out to be the socioeconomic state of the neighborhood. This theater was in a low-income, inner-city area, and dinner and a movie meant, for its residents, having a cheap dinner at the movies, not a separate dinner at a restaurant. Enter the lowly hot dog — the perfect solution for money-conscious patrons. What the theater owners expected was not what happened, but they responded accordingly.

How can you get a good sense of what will give you a competitive advantage in this ever-changing and risk-filled global market?

Reach out to suppliers and customers. Find out whatever you can, and then make smart decisions about what you’ll actively do to respond. It could mean updating the life-cycle planning for short-term products based on early demand signals.

Think of how video-game manufacturers depend heavily on Internet and social media buzz to gauge the customers’ mind-sets, and alter their plans or release dates in response. Another example is Threadless, which produces T-shirt designs based on ratings from customers on its site.

And don’t waste time responding, advised Lee. A fast response is the key to being responsive.

It might sound obvious, but think about how easily changes can get held up in red-tape or communication gaps. Leverage the information technology we now have at our fingertips to get things moving as fast as possible. The fact is the market is morphing and adapting to new situations all the time, and not all of it can be predicted. But honing your sensing skills to perfect your responsive response is what will keep companies in business going forward.

“Deep intelligence and efficient execution” are the keys to becoming “hyper-agile,” said Lee.

“Agility is not enough anymore. We need hyper-agility!”

In the comments below, we’d love to hear about your own techniques to sense and respond. Have you had an unusual experience or some tips you’d like to share with ISM and its members? Let us know! We want to get a sense of what you’re doing, and we, as an association can respond —

Oh, you know the rest!

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