A recent Aberdeen Group analysis of more than 140 manufacturers' demand-management practices found that the top four pressures on them included: meeting customer service expectations (46 percent of manufacturers); rising supply chain costs (41 percent); volatile market resulting in high uncertainty in demand (30 percent); and need to utilize manufacturing assets with maximum efficiency (26 percent).

But what if consumers fall even deeper into recessionary-like spending behavior, and the 33 percent increase in Wii production leads to the once unconceivable: a glut of Wiis on retailers' shelves? "While it is conceivable that there will be oversupply, I think it is unlikely," Pachter says. "Nintendo has not advertised the Wii since the first days of its launch, and if there are issues with demand, it will generate demand through marketing."

Many retailers are already sounding the alarm: On Nov. 12, Best Buy CEO Brad Anderson said that "since mid-September, rapid, seismic changes in consumer behavior have created the most difficult climate we've ever seen," and that Best Buy, which sells Wiis, "simply can't adjust fast enough to maintain our earnings momentum for this year."

Publicly, anyway, Nintendo executives don't appear to be fretting over an oversupply of Wiis. But they're not 100 percent sure of themselves, either. Fils-Aime told Fortune in early October that while the videogame industry has historically "weathered recessionary times fairly well, if we get into unchartered territories with stocks coming severely down and unemployment spikes, then all bets are off."

Manufacturers and Retailers: Joined at the Hip at Christmas

Nintendo's manipulation of the output of its manufacturing facilities, global supply chain partners and production schedule is, of course, just one side of the equation. It also has to work closely with retailers who would love nothing more than to see a steady stream of Wii shipments that will satisfy a hungry customer base this Christmas.

Just how critical and sometimes fragile is the manufacturer and retailer relationship? On the day that Circuit City, the second-largest electronics retailer in the U.S., announced its plans for Chapter 11 bankruptcy protection, Sony reportedly halted its delivery trucks on the way to Circuit City distribution centers. The trucks were stopped in transit and ordered to return to Sony "among worries that Circuit City couldn't pay for the shipments," reported Gizmodo. "This development," notes the article, "means that Circuit City is not getting any Sony products replenished until they are able to convince Sony that their credit line is reliable."

Other manufacturers are also taking steps to not be left holding warehouses of inventory come Jan. 1, 2009. Apple, for example, reportedly slashed its iPhone production plans more significantly than first thought, according to an analyst who follows Apple. Another analyst in early November cut his forecast of iPhone sales 20 percent, from an estimate of 6.2 million for the fourth quarter down to 5 million.

Since iPhones are now sold in Best Buy stores, developments such as these will have trickle-down ramifications on retailers, testing business relationships, as well as the abilities of the companies' demand-planning and sales-optimization systems to synch up with everyone else in the supply chain. Unfortunately, the Aberdeen data showed that spreadsheets "continue to be rampant" even at leading companies, and difficulties in getting timely customer and supplier data also make demand-management systems tough to improve.

AMR research shows that demand data from retail partners that can affect whether manufacturers either halt or speed up production typically takes around four weeks to move from retailer back upstream. "With all these electronic retail systems," O'Marah says, "you'd think it would be instantaneous. It's not."