Supply Chain Management ALM

Top 5 Inventory Disasters of All Time

Wise Supply Chain, Warehouse, and Logistics Managers can learn from other people's mistakes when it comes to warehouse and inventory management. There have been millions of minor inventory problems, and numerous major catastrophes as well.  Some of the disasters were so enormous that it led to the formation of inventory management as an independent area of study in many management colleges keeping in mind the various supply chain organizations operating globally.  It also gave rise to the Six Sigma practices being a dominant force of normalization for inventory and supply chains.

Here are 5 of the top 10 inventory disasters in the world, historically:

1.      Foxmeyer’s Gamble into IT

In this era, information technology was just beginning to be in news and it impressed Foxmeyer the most, which was then the second largest wholesale drug distributor in the U.S, with sales over $5 billion dollars in a highly competitive industry. The company completely overestimated the efficiency gains from the new systems. It picked up orders in large numbers in advance. However the new system failed to handle huge order numbers leading to the collapse of company which filed for bankruptcy and the main operating division of the $5 billion company was sold to its larger rival, McKesson, for only $80 million.  Pennies on the dollar, thanks to their blunders...

2.      Robots Completely Ruin General Motors

Roger Smith the CEO of GM planned to deploy 14,000 new robots in GM plants by 1990 to increase the efficiency in plants. But the move backfired when robots worth billions of dollars failed to work and led to decrease in efficiency and lowered productivity. The entire project was later largely scrapped and Smith fired, as GM’s costs rose and market share shrunk. It is said that at that time GM could have bought both Toyota and Nissan with the money it spent on failed robots.

3.      Adidas Warehouse goes Awry

Adidas decided to upgrade its warehouse to modern warehouse management system but reminded rigid on using its own Stratus computer instead of vendor’s Unix-based System, asking them to port the system to their computers. The move failed and Adidas was unable to process and ship orders leading to major market share losses that persisted for a long while.

4.      No toys for Christmas in 1999 by Toys R Us.com (Whoops!)

It was the beginning of online retailing business and Toys R Us, advertised heavily for its online division promising to make Christmas deliveries for any orders placed online by Dec. 10. Perhaps it underestimated the power of internet as tens of thousands of orders were placed and despite the inventory being mostly in place, the company simply cannot pick, pack and ship the orders fast enough.  It led to the famous “We’re sorry “ emails being sent by the company to its customers two days before the Christmas leaving the customers irked and forever tarnishing the reputation of brand proving a wakeup call to the rest of the industry.

5.      Cisco’s 2001 Inventory Disaster

This example is the perfect example of the excessive inventory affects as Cisco in May 2001, reported $2.2 billion worth inventory extra which it was unable to sell as Cisco was slow to see the slowing demand and ended up with way more routers, switches and other gear than it needed.

Fulcrum/MDSI Webinar: Asset Lifecycle Management as a key component of a Service Provider's Supply Chain

Asset Lifecycle Management, when done properly, is a critical component of an overall Supply Chain Management practice. Management Data Systems International (MDSI) and Fulcrum Technologies - developers of the CATS ALM Software solution - present best practices to allow you to manage complex supply chain and inventory management issues for both forward and reverse logistics, optimizing your CAPEX and OPEX expenditures. Powerful, flexible, intelligent mobile scanning solutions let you scan, track, and get visibility of your assets. From there, we overlay information gathered from integrated systems including MDSi’s Acuity Solution and other financial, engineering, supply chain, OSS, or BSS applications to achieve true, real-time business intelligence to make meaningful decisions. This information can then be used for reports, dashboards, and controls to provide both insight and verifiable data to drive to strategies and corporate initiatives. 

Coupled with MDSi’s logistics management services, we will present best practices, solution examples, and real-world ROI that gives you an incredible competitive and operational advantage.

Panelists:
Mark Bourgoin, EVP, Fulcrum
Shannon Payne, VP Business Development at MDSi, Inc.

To attend click HERE.

ISO 55000: The Future of Asset Management

There is a quiet revolution taking place in enterprise asset management. It’s driven by ISO 55000.

ISO 55000 History

In 2002-2004 the Institute of Asset Management (IAM) in conjunction with British Standards Institution (BSI) developed PAS 55, the first publicly available specification for optimized management of physical assets. This has become an international bestseller, with widespread adoption in utilities, transport, mining, process and manufacturing industries worldwide. The 2008 update (PAS 55:2008) was developed by 50 organizations from 15 industry sectors in 10 countries. The International Standards Organization (ISO) then accepted PAS 55 as the basis for development of the new ISO 55000 series of international standards.

What is ISO 55000?

The ISO 55000 series comprises three standards:

>ISO 55000 provides an overview of the subject of asset management and the standard terms and definitions to be used.

>ISO 55001 is the requirements specification for an integrated, effective management system for asset management. 

> IS0 55002 provides guidance for the implementation of such a system.

THOUGHT LEADERSHIP

Since Fulcrum’s founding in 1998 we have successfully navigated governance, risk and compliance (GRC) regulations on behalf of our customers.

Today we are members of the United States advisory team working with twenty-eight other nations in defining the new international performance standard for enterprise asset management: ISO 55000.

Based on the successful British PAS 55 standard, initially developed primarily for the utilities industry, ISO 55000 will help companies be more successful by providing a common, world-wide approach for improving key processes while increasing trust and communication between business partners and suppliers who support the standard. 

BY INDUSTRY, FOR INDUSTRY

The thought leaders developing the ISO 55000 standard recognize that today’s successful enterprises must address aspects of corporate performance that go beyond traditional metrics which are often too narrowly defined by current short-term expenditures.

For businesses to remain healthy and profitable over the long term, ISO 55000 not only provides the mechanisms to measure and improve a company’s profitability but also its role in health and safety as well as its environmental impact and long-term sustainability. 

COMMON LANGUAGE, COMMON STANDARDS

In contrast to government regulations, the ISO 55000 standard is a cooperative, cross- industry effort to build a common frame- work with a common language.

This approach not only helps individual organizations realize increased value from their assets, it helps companies identify, develop and maintain business relation- ships with partner companies from across the globe who have also elected to work in accordance with ISO 55000 principles. 

As a contributing member to the development of the ISO 55000 standard, Fulcrum is uniquely positioned to help customers prepare for and take advantage of the new opportunities that will arise when ISO 55000 goes into effect in early 2014.

Visit www.fulcrum.net to keep up with the latest news and developments on the future of Asset Lifecycle Management.