Nintendo, one of the biggest video game companies in the world and definitely one of the most popular ones since the 1980’s, released their latest console early this year, the Nintendo Switch. Six months later it is still quite difficult to purchase one of these devices in a store because their supply is so short that people have to resort to waiting in lines for days or paying ridiculous prices to those who resell them online. Everyone wonders how this can be possible since Nintendo is a company that can clearly cover the demand for more units and simply roll bigger numbers out in order to have the device available everywhere, however, this doesn’t seem to be the case.
Situations like this are complicated, and in the case of Nintendo, it probably has to do with the fact that when the Nintendo Wii came out a decade ago, it broke records in markets worldwide beyond the company’s expectations. Clearly, they were not prepared for their success and that happens sometimes, but you would think Nintendo would be prepared after what happened back then to make sure that it didn’t occur again. Some say it has to do with the unsuccessful launch of the Wii U console a couple of years back, a system that did not meet the expectation of fans, nor the projections of the company and Nintendo ended up with many unsold units. It makes sense that they tried to be cautious after that, but at what cost? You can analyze the situation from many different points of view, but in the end, we have to agree that these types of issues are directly related to the management of the supply chain. Today in David Kiger’s Blog, we want to take a look at some of the biggest mistakes made by big companies, in managing their supply chain operations.
Just like we mentioned before with Nintendo, Apple is a company that is used to having customers wait in lines for days to purchase their newest products. The iPhone 5, in particular, stands out because when it came out, the 5 million units the brand had ready for launch day, were simply not enough and it was one of the most notorious examples of missing the demand. The iPhone is a product that requires an increasingly complex supply chain, and every single launch is more successful than the last, with literally millions of people participating and waiting to buy their device. Some people believe this is a rather clever marketing ploy by Apple to keep their products exclusive and to incite customers to buy them by reducing their availability. It is worth mentioning that back in 1995 went through something similar but with dire consequences that the company feels even today. Back then, Apple failed to deliver on the demand of personal computers that were projected for that year, losing a large portion of its market share.
Robotics is serious business today and we can see how they dominate a larger portion of the assembly line and gradually they have been way into other aspects of our everyday life. Robots are no longer a fantasy, and they have become viable choices for accomplishing different tasks that could only be performed by humans a few years back. Sadly, this was not the reality in the 80’s, when GM invested a considerable amount of money into robotics and its application on the production floor. The technology of the time was simply not enough for the demands of the organization, so GM ended up with an assembly line of machines that were mostly worthless. Sometimes it pays off to be ahead of your time. This was not one of those times.
Toys “R” Us
During the humble beginnings of what we know today as e-commerce, Toys “R” Us decided they wanted to take advantage of the online shopping experience and offered their customers the opportunity to make online orders for Christmas, guaranteeing their arrival before the holidays, if the purchase was made before December 10th. Needless to say, they realized that thousands of orders had come in and that it would be physically impossible to fulfill their promise and had to send an apology email a couple of days before the deadline. This situation taught companies a great deal of online shopping and the strain that it places upon the supply chain.
The lesson was not just learned by the toy makers whose reputation was tarnished for years, but also by many other companies that were starting to dwell into the e-commerce craze and had to learn to prepare for the worse and to understand the importance of the commitment they make to customers and how the fulfillment of those promises, just like the failure to deliver, can truly impact their organization.
* Featured Image courtesy of MockupEditor.com at Pexels.com