American PC producers and Italian fashion makers are strange bedfellows. But both are world leaders in industries with short-lived products, and both need to excel in supply chain management to keep up with an increasingly dynamic marketplace. Both face ever-shrinking product life cycles, the globalization of sourcing and manufacturing, and a mushrooming of new products. And both are having to cope with more sophisticated customers demanding tighter delivery terms, as well as powerful suppliers dictating long lead times.

Consider fashion. A high-end fashion manufacturer offers up to 2 or 3 million SKUs, 95 percent of which change every six months. Average sales are two or three units per SKU, so that forecasting is inherently unreliable. To make things worse, the typical lead time from fabric manufacturers is a full three months.

How do you manage such a business? Traditionally, the risk in the system was borne almost exclusively by retailers, who were required to place their entire order a full six months before the start of the season. But, as their power grows, retailers are demanding more flexibility and limiting their advance orders to less than 70 percent of their...