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Module 8

Summative Assessment 8.1

100 marks

This assessment covers:

Unit 252288 – Align logistics activities to achieve competitive advantage

Please read the following case study and answer the 5 questions that follow.

Janua 2006January 2006

The 11 Greatest Supply

Chain Disasters


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

6. Toys R Christmas 1999

It’s 1999, and on-line retailing is finally starting to heat up. The

on-line division of the leading toy retailer, Toys R Us,

advertises heavily, and promises it will make Christmas

deliveries for any orders placed by Dec. 10.

Toys R is swamped with tens of thousands of orders.

Though the inventory is mostly in place, the company simply

cannot pick, pack and ship the orders fast enough – though it

was close.

“We’d have been OK if Christmas was on Dec. 26,” one company executive


Some employees work 49 straight days

Just a couple of days before Christmas, the company sends out thousands of

now infamous “We’re sorry,” emails, telling those customers their orders will not

arrive in time for Christmas. The media has a field day, and customers are irate.

“How do I explain to my four-year-old that his present will be coming a week

late?” is typical of more gentle complaints in the avalanche of mail and calls the

company receives. “I’ve never been exposed to fouler language,” says then vice

president Joel Anderson.

The Toys R Us brand generally takes a big hit, even though other e-tailers have

some similar problems. In fact, the Christmas of 1999 causes hundreds of

companies to analyze their e-fulfillment capabilities in more detail the following

year, and put in capabilities that significantly reduce the issues in 2000 and

beyond. The Toys R failure really was a wake up call to the rest of the


Toys R later outsources its fulfillment to

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Please answer the following 5 questions:

1. How would you implement supply chain strategies with specific reference to the article above? (20 marks)

2. How would you optimising supply chain functions with specific reference to the case study above? (20 marks)

3. Explain how you would measure the supply chain operation with specific reference to the case study above? (20 marks)

4. Explain how you would enable supply chain operations with technology with specific reference to the case study above. (20 marks)

5. Explain how you would maximise returns on supply chain investments with specific reference to the case study above. (20 marks)