Companies struggle with holiday season preparedness due to flawed management

Many companies face predictable yet recurring struggles during the holiday season, not due to the unpredictability of demand, but due to a failure in fundamental business management, according to Andrea Montecchi, chairman of Oliver Wight Americas.

The holiday period acts as an annual stress test for a company's operational capabilities. If navigating the fourth quarter requires extraordinary measures like emergency meetings, new dashboards, or constant executive intervention, it suggests that the normal management system is inadequate. Montecchi emphasizes that while the holidays may warrant increased attention, they should not necessitate different management skills than those used year-round.

Montecchi distinguishes between a forecast and a demand plan. A forecast is merely a prediction of future demand, while a demand plan is a business commitment. It specifies what the company intends to sell, the underlying assumptions, and the resources and actions to be deployed. Effective planning involves making these assumptions explicit to prepare for potential uncertainties.

Crucially, decision-making should not be abdicated to technology. While technology can improve visibility, human judgment is essential. Clear decision rights, a shared plan, and an understanding of its assumptions are vital. Companies must proactively decide where they are willing to accept risk, such as in inventory levels, rather than reacting defensively when faced with pressure.

Montecchi urges businesses to challenge their demand plans and underlying assumptions now. Well-prepared companies are accustomed to planning amid uncertainty, recognizing material changes, and making timely, effective decisions. The holiday season should reflect a company's consistent operational strength, not reveal seasonal management deficiencies.