What We Can Learn From Four Brands' Supply Chain Management Failures

Demand planning leads to White Claw Spiked Seltzer shortage

Spiked seltzer has become a billion-dollar industry, and White Claw is leading the charge. The brand saw exponential growth in 2019, with sales up 250 percent year over year.^[1] While this kind of demand is often desirable, it turns out there can indeed be too much of a good thing. The same year, the company couldn't produce and ship enough spiked seltzer to meet demand.

As a result, White Claw instituted a transportation, distribution, and logistics policy called allocation. This practice involves intentionally limiting supply to make sure that all markets receive regular shipments, even if supply runs out quickly. Allocation also means that White Claw isn't increasing the volume of shipments to stores that sell out faster. While the company worked to fortify its supply chain, this strategy allowed them to continue reaching all their markets, if at a reduced rate.

The Takeaway: White Claw's rapid rise reveals how important it is for companies to have the proper food and beverage supply chain infrastructure in order to scale. This includes systems and a strategy to predict and forecast demand to proactively meet customer needs—eliminating the need to essentially ration inventory and underserve high-demand markets.

Supply chain transportation issues cause KFC to run out of chicken

In 2018, KFC’s supply chain issues closed more than half of the company's 900 restaurants in the UK. The fast food chain had shifted to a new delivery partner, causing major disruptions to their food supply chain. Without deliveries of fresh chicken, many of the stores were forced to close — a transport logistics issue that experts say cost KFC up to £1 million daily.^[2]

However, the fast-food giant handled the situation gracefully and with a sense of humor, using social media to respond quickly and honestly to questions. The company also created a page on their website so customers could see which locations were still open. Further, they continued to pay their staff even if restaurants were unable to serve customers.

The Takeaway: Supply chain issues are inevitable, but mitigating losses needs to be a top concern for the business. Running pilots is a must, and there are even simulation technologies to stress test supply chain operations from a safe digital environment

KFC also proved being transparent and attentive to customers’ needs while actively working to fix the problem can be an opportunity to build trust and reinforce customer relationships. 

eCommerce inventory management woes for Rent The Runway leads to canceled orders

A few years back, the clothing subscription start-up Rent the Runway received numerous complaints from customers saying that outfits were consistently arriving late — if they did at all. Issues with inventory management and their supply chain began in mid-September 2019, when Rent the Runway installed a new supply chain management software for its New Jersey warehouse.

Customers were contacted via email, warning them that the company could not guarantee that their scheduled orders would arrive on time. Rentals for formal events were canceled, and the company planned on stopping to take new subscribers for about six weeks. Marv Cunningham, Rent the Runway’s head of supply chain had stepped down at the end of September. Fortunately, by 2 October, the subscription service was back online. Customers who never received their orders were compensated with $200 in cash.

The Takeaway:  Although the issues were resolved quickly, the situation is an important reminder of the amount of time that goes into proper retail supply chain risk management.

Inventory management challenges contribute to Target Canada's misfortune

This is an older example, but it's worth mentioning. In 2013, Target opened its first stores in Canada. The move made sense — competitors like Walmart had done so successfully, and the Canadians were already crossing over to the U.S. to shop at Target. So, Target Canada seemed like a slam dunk. 

However, less than two years later, the company announced it would close all of its 133 Canada branches. The combination of an overly ambitious plan — the company launched with dozens of stores and swiftly scaled up to more than 100 — paired with insufficient inventory stock, noticeably higher price points, and a lack of Canadian products led to a massive supply chain failure for Target Canada that cost upwards of $2 billion.^[3]

The Takeaway: There are no sure things in supply chain. But, if you lay a solid foundation, you are poised to not only meet customer needs, but to pivot when things don't go as planned. Even the biggest brands need to nail warehouse and inventory management. If you build it right, they will come.

How brands can avoid supply chain failures

As the above companies have proven, quality products and creative marketing are key components of success, but in the end, there's no substitute for a robust and well-executed supply chain. We all know that things move fast in supply chain. Yes, we listed some supply chain no-nos here. But, for every cautionary tale, there are infinite opportunities to make better connections with your customer base and delight new customers. And the right supply chain management software can position you to jump on opportunities.