Supply Chain Fail #1
Given the numerous recessions, natural disasters, political uprisings and international conflicts, it comes as little surprise that so many high profile businesses have failed to succeed in such uncertain market conditions. Over the coming weeks we will be considering how businesses, both past and present, have become victims of supply chain issues. Throughout this short blog series we will be looking at what went wrong and how tools and technologies available today could have prevented business fatalities. In the first part of this series we will be looking at how one of the biggest players in the computer industry crashed out of business.
If only Granville Technology group really did make time machines…
The modern PC industry offers customers a vibrant fruit basket of products complete with apples, raspberries and blackberries in every size, shape and color imaginable. However, without the pioneering PC icons of the 90s, the industry would probably not have blossomed into the technical marvel it is today. While this era was an important decade in shaping the industry, the rapid growth in home computing was not without its fatalities.
Throughout the 90s and early 2000s, Granville Technology Group dominated the personal computer market with its flagship TINY, TIME and Colossus brands. The reasonable prices and catchy commercials featuring famous sci-fi characters helped the manufacturer grow into one of the biggest IT companies in the UK. However, following a rapid expansion program, the IT giant began to feel the strain of its own success.
In the early 2000’s, the technology group announced its plans for aggressive expansion with the opening of numerous high-street retail outlets across the UK. However, moving away from their successful mail-order business model put them in direct competition with discounters such as Dixons and Car Phone Warehouse, both of which remain popular brands on UK high-streets.
After just a few months of fierce competition, uncertain market conditions and financial woe, Granville technology group had little choice but to call in the administrators. When reports initially hit the press, it seemed the business failure had been the result of price deflation and falling demand. However, the full extent of the problems leading to the liquidation soon became apparent, and it seemed poor supply chain management played a major factor.
The combination of sudden shortages of key components and poor service levels drove up unit costs. In addition, incomplete inventory information and the substantial overheads from its new retail operations further exacerbated market conditions, completely wiping out the once lucrative profit margins.
The liquidation was a wakeup call as nearly all 1500 employees lost their jobs and many more customers were left disappointed as the manufacturer failed to deliver or offer full refunds. The demise of Granville Technology Group marked a change in the computer industry as customers became increasingly more demanding and were no longer willing to accept unsatisfactory service.
If only Granville Technology group really did make time machines…
Given the technologies available today, this whole episode could have been avoided. For example, intelligent supply chain tools could have been utilized to create a bird’s eye view over the entire supply chain, thus enabling the business to tackle supply issues head on before they had a negative impact on availability and service levels. Furthermore, information generated from such tools could have provided the business with a clear single set of data which could be used across the entire enterprise for strategic decision making. This would have provided Granville Technology Group with vital information to help them better understand how the market was changing and thus take steps to mitigate the consequences.
Although Granville Technology Group collapsed 8 years ago, the devastating consequences supply chain issues can have on a company’s ability to function properly should still be taken seriously today. As businesses increasingly come under market pressures, it is vital they take action now in order to ensure a long and successful future.
What supply chain fails pop into your mind after reading this post?
