Wednesday, June 02, 2010
Where do forecasts come from?
Ok, so maybe this question doesn’t elicit the same type of dread a parent may feel when asked by a child. As a parent at least you can buy some time with wild tales of storks. Unfortunately, Telecom executives can’t pull such a response out of their back pocket when it comes to getting their arms around the origin of their network equipment forecasts.
The problem – of course – is that Operations and Finance usually behave like politicians representing different sides of the isle. Both working for the common good but maintaining contrasting priorities and agendas. As one can imagine, bi-partisanship can be just as rare as it is in Washington.
Among the victims of this organizational schism is inventory/stock forecasting. Procurement wants to know when stock levels and spare capacity is running low. But, too often, they only learn of the shortage when it’s critical and they have to expedite the replacement – paying top dollar because they’re desperate.
Operations, on the other hand, is overworked and understaffed in their race to roll out new services and maintain existing infrastructure. After the initial product rollout, they are not accountable to Procurement. Consequently, they aren’t exactly rushing to provide finance with stock levels.
At most carriers, the standard reporting structure has Operations reporting up through the VP Ops/COO, while Procurement reports to the VP Finance/CFO. So the Operations and Procurement staff support each other, but don’t necessarily have accountability to one another. And therein lies the disconnect.
Can the gap by bridged? Call me an optimist if you like but I believe it can. Solving the situation doesn’t require shaking up the organizational chart, just a better lens into inventory levels. Better visibility will empower operations and procurement professionals to make more strategic business decisions regarding the acquisition and disposition of assets. Decisions that at the end of the day will generate significant value for the organization in the form of reduced CapEx, new revenue streams and networks running at optimal efficiency.
