Earlier sales stuffed the channel with inventory volumes that exceeded market demand
• Short product life cycles for high tech products render today's inventory obsolete if it is not sold rapidly
• Even heavy discounting can fail to create demand for inventory no one really wants as a product has passed its prime
I see the Wall Street Journal article as highlighting an inherent weakness of the mass production business paradigm—forecasting. This paradigm requires that:
• Inventory must be built to a forecast—a forecast that is based on "market" assumptions, not actual customer demand
• Inventory must be available in the sales channel to be sold—not having an item in stock can cost a manufacturer a sale
• Inventory that doesn't sell must be deeply discounted or written off if it doesn't sell before new products or new seasons come along
So, how does a mass production company like Acer better align supply with demand? They can't. They didn't. And, now a write-down of $150 million is the outcome.