In last essay Jracking explained what is bullwhip effect, and how the storage managing is influenced by it. In this essay Jracking will continue to talk about key factors that may cause problems in storage managing.
a) Volatility of Requirements(please refer to Jracking’s last essay)
b) Uncertainty of Market
Sometimes a company needs to judge market condition and predict market trend to take the initiative in its own hands. However, market itself is uncertain and no one can predict the trend without any mistake.
Let’s take the company once I served for an example: I was a employee in a famous mobile communication equipment company in the year of 2000. Our sales department made a false prediction on China’s development of third generation mobile communication technology.
Most people use 4G network, but in 2000, people were still using 2G network. At that time, the technology standard of 3G network was discussed all around the world.
Due to the inconsistent technology standard of 2G network, global roaming could hardly be realized. For example, you could not use the same mobile phone in Japan that was usable in China.
The International Telecommunication Union put forward 3 kinds of 3G technology as international main stream: WCDMA、CDMA2000 and TD-SCDMA. And China chose TD-SCDMA finally.
Unfortunately, before China made the national standard, our sales department predicted that China would choose the other kind of technology. Moreover, we have already imported several communication equipment from Europe, hoping to take control of the market before our competitors do. It turned out the equipment became inaction stock and have to be sold at a very low price at last.
From the above example, you may see how stock is greatly affected by the uncertainty of market.