Tuesday, January 29, 2013

Crowdsourcing Demand Forecasts

One industry that we discussed in class that has a particularly difficult process in terms of forecasting demand is the clothing and apparel business. Orders must be placed significantly earlier than clear customer preferences are determined and those preferences are subject to rapid and dramatic shifts that retailers must adjust to accordingly. Once a style or trend is no longer popular, retailers struggle to move merchandise off their shelves and minimize losses as much as possible.

Crowdsourcing -- "the practice of companies making an open call to a broad community to solve a problem, either through collaboration or competition"(1) -- is one way that some retailers are taking a dramatically different approach to forecasting demand and minimizing the impact of constantly shifting trends. Threadless.com, an online t-shirt retailer, is one such company that has had particular success with this practice. Instead of trying to predict what trends their consumers will be looking for and producing t-shirts accordingly, Threadless allows its online users to post new designs and ideas online and then has its customers vote and rank the submissions. The company than produces only the post popular t-shirts based upon exactly what their customers want. Threadless is basically able to completely remove the forecasting aspect from its business model and instead respond directly to actual customer demand. (2)

While this exact model is not feasible for all industries or even all clothing retailers, it is interesting to think about how this idea of crowdsourcing can be integrated into the demand forecasting process. With the rapid technological advancements in this arena, companies have relied more and more heavily on models, simulation and data. While these models and tools do often produce more accurate and sensitive forecasts, it's important to consider what role less sophisticated tools can play in the process. Are there ways that more traditional manufacturers can apply the principles and practices of crowdsourcing into their forecasting?

(1) "What is Crowdsourcing?" Daily Inforgraphic. <http://dailyinfographic.com/what-is-crowdsourcing-infographic>. Accessed January 29, 2013.
(2) "Crowdsourcing Forecasts in the Apparel Market." All About B2B - GSX, Inc. <http://www.gxsblogs.com/keifers/2010/05/crowdsourcing-forecasts-in-the-apparel-market-2.html> Accessed January 29, 2013.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.