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3 Times Big Brands Made Big Inventory Management Blunders

by Simon Eskow
Big brands sometimes make even bigger inventory blunders. A lot of those mistakes can be avoided.

All brands will make mistakes with their inventory from time to time. A bad call on a product that doesn’t sell, an operational issue that disrupts a shipment, badly managed sales that turn into sudden and unexpected stockouts. It’s life. These things happen. Most of the mistakes, however, don’t rise to the level of disastrous blunder that makes the news. So while an inventory management mistake can be serious, it won’t be as bad as a few things that have happened over the years. The funny thing is, in a lot of cases, these kinds of inventory mistakes can be avoided.

The Nightmare Before Christmas

Back in 2011, Best Buy gave us one of the most horrific holiday inventory management blunder stories ever. The US brick-and-mortar electronics chain had been taking lots of orders online for the two months leading up to the holiday. Then, a few days before Christmas, Best Buy canceled 30,000 of those orders because, as it turned out, they didn’t have the items in their inventory. It’s uncertain what exactly happened in Best Buy’s warehouses/distribution centers, but the ability to integrate online and in-store orders with warehouses may have saved Best Buy from a huge public and customer relations disaster. To paraphrase an ancient Seinfeld episode, anyone can take an order, it’s the filling of the order that’s important.

The Great Warehouse Disaster

A few years later in 2014, Target found its plans to expand to Canada all jammed up over a Barbie-branded toy SUV. The US-based retail chain had already opened 124 stores across the Great White North in its 12 months there when the Barbie toy (along with a bunch of other products) started piling up in Target’s Canadian distribution centers, eh. Target couldn’t replenish stores with these products fast enough, leaving warehouses in a jam and retail store shelves bare. And it was all due to the fact that the barcode numbers on the items didn’t match the numbers recorded in their computer system. This blunder contributed to Target’s quick end in 2015.

The Fatal Rebate

It’s possible that an inventory management system is only as good as the people using it. In other words, no inventory system can replace sound judgment. In Australia, nothing illustrates the folly of poor executive judgment quite like the 2016 collapse of electronics retail chain Dick Smith. The company went into liquidation with about $60 million worth of unsold inventory, including 25 years worth of store-branded batteries that no customers wanted. The retailer was making purchasing decisions based on the rebates it could get from its suppliers, not based on what would actually sell. The company’s addiction to rebates that never materialized proved fatal, turning a one-time billion company into a pile of IOUs.

Cin7 Event Shows How to Avoid the Blunders

Inventory problems are common, but inventory blunders can destroy a brand. That’s why having a great brand and a great product isn’t enough to win in today’s ever-changing, intensely competitive retail landscape. Learn the lessons of a once-great brand at our February breakfast event, Killer Brand: Pumpkin Patch and How Inventory Can Make or Break You. Guest speaker Bronny Jacobsen, former GM of Merchandise for Pumpkin Patch, will share her what savvy brand managers and business owners can learn from the rise and fall of Pumpkin Patch as they develop their own strategies. Click below to register for the Auckland, Melbourne, Sydney or Brisbane events in February.

Published: 12/20/2018