Managing a supply chain is a difficult thing to do. If you’ve ever tried to juggle 12 balls at once while someone throws french bangers at your feet, in a thunderstorm, then you may have some idea of the challenges faced.
For many, the task has proved too great, resulting in some spectacular errors that have seen businesses and CEOs fall.
GM attempts to introduce robots into the supply chain
Robots always seem like a good idea at the time, until they’re chasing you down the street and reforming from liquid puddles.
In the 1980s, with Short Circuit still fresh in the memory but apparently not Terminator, then-CEO of General Motor’s, Roger Smith, decided to embark on a drive to increase the number of robots in GM factories from 300 to 14,000 by 1990.
Smith set up a joint venture with Japan’s robot designer Fujitsu-Fanuc to make his dream a reality, spending billions of dollars in the process.
Unfortunately, the robots didn't work. Instead, they spent most of their time painting themselves and dropping windshields. Productivity dropped, costs increased, and market share shrunk. Smith was let go.
Target flies too close to the sun
Target’s attempt to break Canada last year is a lesson in supply chain mismanagement and how not to move into new markets.
The US retailer attempted to open 124 shops and three large distribution centers in the country at the same time. They did this with an apparently faulty computerized-assisted ordering system that left warehouses overflowing with stock while store shelves sat bare. Marc Wulfraat, president of MWPVL International Inc., a logistics and supply chain consulting firm in Montreal, noted that “they just completely lost control of inventory,” something that wouldn’t have happened if they’d started with less stores and been able to test its distribution network first.
The company announced in February that its travails in the Great White North had lost the firm $1bn dollars.
Adidas goes for broke
Beginning in 1993, Adidas attempted to implement two new new management systems in its Spartanburg distribution center, insisting that Integrated Software Logistics Engineering’s system be ported to fault tolerant Stratus computers.
Despite the system not being ready, Adidas ploughed ahead. It didn’t work.
The sports brand under shipped by an estimated 80% and took years to recover the market share it lost.
Mattel's recalls 1.5 millions toys
Mattel's highly publicized 2007 recall of millions of toys made in China is a lesson in why not to rely on offshore suppliers to do their own testing.
Despite subjecting the companies it does business with to outside audits to ensure they operate properly and ethically, Mattel's main supplier of the Cars products, Early Light Industrial, had subcontracted out the painting of the toys to another company, Hong Li Da. Hong Li Da, rather than use paint supplied by Early Light, instead used paint that contained potentially poisonous lead.
The issue of lead in paint is, according to McDonalds, widespread in China, with the restaurant chain developing a system to monitor paint all the way through the supply chain back to the paint suppliers to try and solve the issue. Mattel’s failure to do likewise had a hugely detrimental impact to its bottom line and brand.
Aris Isotoner’s sourcing snafu in 1994
In pursuit of lower costs, Isotoner - then a division of Sara Lee - made the fateful decision to leave its highly successful Manila glove/slipper plant and look for cheaper options at other Asian locales.
The ‘cheaper’ option in fact turned out to be the between 10-20% more expensive, far slower than the Manila plant, and the production quality was worse. Sales plunged by $120m by 1997, and it was sold by Sara Lee.