I'm always thrilled when I can find a bridge between books on completely separate topics. I've recently read Nassim Nicholas Taleb's 2012 book "Antifragile" and, coupled with my extensive research into Lean thinking and the Theory of Contraints (TOC), I've reinforced my opinion about forecasting.

Let's cover the easy stuff first. Former Lean Enterprise Institute CEO Jim Womack and TOC creator Eliyahu Goldratt claim, in no uncertain terms, that sales forecasts are worthless. Worse still, using the sales forecast as justification to buy parts "just in case" or to build goods to fill a warehouse ties up capital and hurts the company's cash flow. Both Lean and TOC suggest buying what you need based on customer demand. That is, buy parts at the same pace as sales volume, then build the product very quickly.

The Lean and TOC opponents of yesteryear used extensive "whataboutism" to discredit "just in time" inventories. Most of these scenarios revolved around catastrophic scenarios, some of which could be "black swans", or unknown unknowns. This line of argument is valid and Taleb addresses it, albeit indirectly.

Taleb explains in his book that predicting the future is impossible. He suggests building systems in such a way that they don't need forecasts to succeed. If you operate in a closed, non-improving environment where everything is efficient and seemingly predictable, you are vulnerable to black swan events. More than being robust, antifragile systems must improve with the introduction of randomness. At a component or product level, variation is undesirable, but I'm talking about the production process and its reaction to randomness.

Some may misinterpret Taleb and say "just in case" inventories are needed to protect against the randomness, and as such, are antifragile. Precisely the opposite is true. Burying process problems with spare parts, more employees, or other gimmicks is a prime example of non-linearity. This term describes a mismatch between effort and result. Doubling inventory in this way will most definitely not lead to a doubling of cash inflow, a halving of lead time, or any other such positive business outcome.

Ironically, "Lean" was almost named "Fragile" by its creators decades ago because it was susceptible to supply chain disturbances. I don't think Taleb would have classified it that way, since the spirit of lean is continuous process improvement, not "making the numbers".

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