April 18, 2018    < 1 min read

All It Takes is One Component

Early in 2016, Oculus started taking preorders for the hotly anticipated Oculus Rift VR kit – the stuff off the future. The Rift sold well – all of the units cleared within the hour. Sadly, Oculus’ supply chain management was not the stuff of the future; despite promising that orders would ship in March, Oculus took until July to produce and ship all of the pre-order products.

The reason for the delay? An unexpected component shortage. We may never know what caused that particular stockout, although the saga is a good reminder to guard against some of the key stock -out risks. In particular, manufacturers should use the bill of materials and assembly functions in their stock control software to produce a comprehensive list of components. Remember, all it takes is one missing component to shut down production. Then, manufacturers should take a look at the supply chain for each of those components. Is there any way to reduce the risk of non-delivery?

Managing Just-in-Time Inventory

Kentucky Fried Chicken prides itself on offering fresh chicken to stores daily, so its approach to stock control is likely to resemble a ‘just-in-time’ stock control system. In the UK and Ireland, unfortunately, its inventory was not in time. After switching to a new logistics provider, KFC stores missed out on their daily delivery of fresh chicken resulting in shut stores and angry customers.

The KFC saga is a good reminder that lean businesses need to carefully consider how resilient their supply chain is likely to be when things go wrong. Just in time businesses should, where possible, identify weaknesses in their supply chain and find backup options to keep the production line going in a crisis.

When the Chips Don’t Fall in Your Favour

On a stormy night in New Mexico in 2000 a bolt of lightning caused a fault in a semiconductor factory. That semiconductor factory was no ordinary factory, rather it was a key link in a very complex supply chain for Nokia and Ericsson, two of the largest cell phone manufacturers at the time.

Nokia responded quickly, seeking further information and reaching out to other suppliers. Not long ago, Ericsson had scaled down by choosing to single-source many key components in a bid to keep costs down. This point of inflexibility in its supply chain was Ericsson’s downfall as without alternate suppliers, the company was unable to launch several new product lines and lost consumer confidence. Ericsson ceased to manufacture phones not long after.

Any large business can look to these classic tales of supply chain failure as examples where unmitigated risk went awry. Consider taking the time to identify your business’ weaknesses and keep your supply chain running smoothly.

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