supply chain
January 2006
The 11 Greatest Supply
Chain Disasters
Introduction
Many of us rightly take pride in the growing recognition role of supply chain both within companies and in the public markets. An increasing number of companies cite supply chain initiatives and prowess in annual reports and meetings with financial analysts.
But of course the opposite effect must then also occur – supply chain snafus are increasingly cited by CEOs and CFOs to explain poor financial performance.
Which got us thinking, what have been the greatest supply chain disasters we’ve seen in the 20 years or so since that term started being used? SCDigest did a lot of research to find out.
First, some caveats: we focused only on “man made” disasters, and so excluded such things as Mother Nature and factories burning down, even though these often evidence holes in supply chain strategy and risk reduction plans. Second, we looked for examples that had a significant impact on the company in terms of finances, stock price, brand equity, etc. Third, it’s still subjective, and we probably missed a few “good” candidates.
Below you will find a summary table of our “Top 11,” ( weird number, yes, but we just couldn’t find one to cut) in order from worst to not quite as worse, as well as more detailed stories of the nature and impact of each disaster.
Interestingly, none of our Top 11 occurred after 2001. Coincidence? While at one level we see more public attention to supply chain issues, it appears the lessons from failures in the past have at least led companies to avoid the catastrophic impacts. 1. Foxmeyer’s 1996 Distribution Disaster
In 1996, Foxmeyer was the second largest wholesale drug distributor in the U.S., with sales over $5 billion dollars in a highly competitive industry.
The disaster started with an ambitious project to revamp both its IT systems and its distribution facilities. This involved a new ERP system, and a highly automated DC in Ohio that relied
The 11 Greatest Supply
Chain Disasters
Introduction
Many of us rightly take pride in the growing recognition role of supply chain both within companies and in the public markets. An increasing number of companies cite supply chain initiatives and prowess in annual reports and meetings with financial analysts.
But of course the opposite effect must then also occur – supply chain snafus are increasingly cited by CEOs and CFOs to explain poor financial performance.
Which got us thinking, what have been the greatest supply chain disasters we’ve seen in the 20 years or so since that term started being used? SCDigest did a lot of research to find out.
First, some caveats: we focused only on “man made” disasters, and so excluded such things as Mother Nature and factories burning down, even though these often evidence holes in supply chain strategy and risk reduction plans. Second, we looked for examples that had a significant impact on the company in terms of finances, stock price, brand equity, etc. Third, it’s still subjective, and we probably missed a few “good” candidates.
Below you will find a summary table of our “Top 11,” ( weird number, yes, but we just couldn’t find one to cut) in order from worst to not quite as worse, as well as more detailed stories of the nature and impact of each disaster.
Interestingly, none of our Top 11 occurred after 2001. Coincidence? While at one level we see more public attention to supply chain issues, it appears the lessons from failures in the past have at least led companies to avoid the catastrophic impacts. 1. Foxmeyer’s 1996 Distribution Disaster
In 1996, Foxmeyer was the second largest wholesale drug distributor in the U.S., with sales over $5 billion dollars in a highly competitive industry.
The disaster started with an ambitious project to revamp both its IT systems and its distribution facilities. This involved a new ERP system, and a highly automated DC in Ohio that relied