Warning: This blog post isn’t for the faint of heart. In fact, I should include a PG-13 rating on it. Just kidding, although, for those involved, the scare factor must’ve been pretty high at times. Halloween is big business. In fact, National Retail Federation’s annual survey estimates that enthusiastic celebrators will spend an estimated 8.4 billion on Halloween – an all-time high in the survey’s 11-year history. You could say the pressure’s on for retailers to deliver the costumes, treats and decorations demanded by the estimated 171 million Americans planning to partake in Halloween festivities. But the scary truth is that sometimes retailers can’t deliver. Often, unexpected events such as suppliers failing to deliver, software glitches and even Mother Nature can wreak havoc with even the best supply chains. On that note, I’d like to share some tales that undoubtedly still “haunt” the parties involved.
The great pumpkin shortage scare
What are Halloween and Thanksgiving without pumpkins? In October 2015, it was a frightening thought for fans of falls’ favorite flavor. Predictions warned that only those who got to the store weeks before Thanksgiving would find canned pumpkin. A pie-making crisis was inevitable. The reason: Illinois produces about 90% of sugar pumpkins each year. But when Mother Nature (in the form of heavy rains) hit Illinois hard, half of the crop was wiped out. Fortunately, Libby's, which has an estimated 80% of the canned pumpkin market, had enough canned inventory to make it through Thanksgiving. Pie crisis averted, but just barely.
Hershey’s Halloween nightmare
In September 1999, candy giant Hershey Foods former CEO and Chairman told Wall Street analysts that the company was having trouble with its new order-taking and distribution computer system. He also said that the issues would keep Hershey’s from delivering $100 million worth of Kisses and Jolly Ranchers for Halloween. Guess what happened then? The company’s stock price fell more than 8% that day, and the computer system mystery made the front page of The Wall Street Journal. Was the 8% unusually high? It was about the norm according to research shared in the World Economic Forum Report. On average “supply chain disruptions can reduce shareholder value by 7%, with disruptions affecting stock prices even before formal announcements or coverage of impacts.”
Wal-Mart’s frightening RFID debacle
On June 11, 2003, Walmart CIO announced that the company would require its 100 top suppliers to implement radio-frequency identification (RFID) – technology that promised fast-tracking of items and, ultimately, a more efficient supply chain. But things went wrong, terribly wrong. The retailers involved, the researchers, the standard organizations underestimated the issues:
- RFID technology had not matured enough to prove effective in the industry in a real-world setting like retail supply chain.
- Pricey RFID tags could be the difference between profit and lost for products with small margins.
- Maintaining two inventory streams, including a Wal-Mart dedicated one, was costly for suppliers.
- RFID technology proposed a threat to suppliers’ IT departments and managers.
In response to the RFID hype started by Wal-Mart, RFID manufactures and investors poured in large amounts of money. But, sadly, RFID never really took off. It was RIP for many companies that bet the farm on RFID. By 2007, after various delays and issues – Walmart changed its RFID strategy. While RFID technology wasn’t completely abandoned, the promise of making sure products landed at the right place at the right time, never became supply chain reality. Have you got scary supply chain stories to share? We’d love to hear them. We can always, write a sequel to this post and call it, “Tales from Supply Chain Crypt 2.”