There is nothing unexpected about the holiday season. Manufacturers and retailers know it is coming, understand its importance, and have years of experience to inform strategic plans.
Yet as the third quarter closes, many companies begin behaving as though something extraordinary is about to happen. Demand plans get another look. Inventory, capacity, and supplier commitments receive greater scrutiny. Meetings multiply. Leaders ask what extraordinary measures will be necessary to navigate the holidays and deliver year-end results.
By then, it is probably too late.
It’s not too late to expedite a shipment, reposition inventory, or change a promotion. But it’s too late to build the management capabilities necessary to deal effectively with uncertainty. More importantly, many companies are trying to solve the wrong problem.
THE DIFFERENCE: A FORECAST AND A PLAN
It is impossible to perfectly predict holiday demand. Forecasts and demand plans can help.
A forecast is a prediction, an informed estimate of what future demand might be. Like a weather forecast, it provides useful information.
A demand plan goes further. It converts that expectation into an intentional business commitment: what we intend to sell, the assumptions supporting that expectation, and the resources and actions we will put in place to deliver it.
A forecast tells us what we think will happen. A demand plan establishes what we intend to do about it.
When we commit to a plan, we do not assume it will be correct. Consumer behavior changes. Competitors act. Promotions surprise us. Suppliers miss commitments. Economic conditions shift. Good planning prepares the organization for those uncertainties by making the assumptions behind the plan explicit.
DECISIONS COME NEXT
Once those assumptions are explicit, management needs to determine whether the assumptions behind the plan are still true. And if they aren’t, what decision does the company need to make?
That is preparedness.
The value in scenario planning is in considering what decisions those futures might require before the pressure arrives.
If demand materially exceeds the plan, what will we do? If it falls short, when do we change replenishment? If capacity becomes constrained, which products, customers, or channels take priority?
Not every possibility needs a predetermined answer. Judgment still matters. But consequential uncertainties shouldn’t arrive in the executive meeting for the first time after they have become consequential.
A scenario without an associated decision is simply an interesting possibility.
The same discipline applies to inventory. The instinct during the holidays is understandably to protect inventory availability. But inventory doesn’t insure against uncertainty. Inventory is capitalplaced at risk. Carrying more inventory may be the right decision. The right decision could also be to accept a greater risk of stockout to protect cash or margin. The business must intentionally decide where it is willing to place risk and why.
DATA DOESN’T MAKE DECISIONS
Technology can bring the issue to light, but people make the decisions. Seeing a problem sooner isn’t the same as responding to it sooner. I have seen organizations with sophisticated planning systems and extraordinary amounts of data still struggle to make timely decisions.
If decision rights are unclear, teams may pursue conflicting objectives and routine exceptions may require executive escalation. In these situations, better visibility does not solve the underlying problem; it simply allows the organization to watch it unfold in greater detail.
Decision-makers need a common plan, clarity about its assumptions, appropriate authority, and enough latitude to act when circumstances materially change.
Which brings us back to the holidays.
TREAT THE HOLIDAYS AS AN ANNUAL STRESS TEST
Demand volatility, inventory exposure, supplier constraints, and compressed decision windows may become more pronounced during the season, but these are not unique to this period. The holidays just compress normal business uncertainty into a shorter, higher-stakes period.
That makes the holiday season an annual stress test of how well the business is managed every other season of the year.
If navigating the fourth quarter suddenly requires special meetings, new dashboards, emergency supplier coordination, extraordinary planning exercises, and constant executive intervention, perhaps your normal management system needs fixing.
The holiday season may warrant greater attention, but it should not require different management capabilities.
As the third quarter closes, challenge the demand plan, its assumptions, and where you have chosen to place risk. Make the adjustments that still matter.
Then ask why extraordinary measures are necessary.
The best-prepared companies will already be accustomed to planning amid uncertainty, recognizing material change, making effective decisions, and acting in time to affect the outcome.
The holidays are predictable. The outcomes aren’t. Managing that uncertainty shouldn’t be seasonal.
Andrea Montecchi is chairman of Oliver Wight Americas.
Â
