Lessons Learned from History’s Biggest Supply Chain Fails
Supply chain failures are more common than we might think. From minor oversupplies to critical shortages, these disruptions can ripple through industries, leading to anything from mild inconveniences to global crises. While some issues remain hidden within boardrooms, others are catastrophic enough to capture global headlines.
Today, we’re sharing some of those big ones and the lessons you can take away from them. Each serving as a powerful reminder that no matter how sophisticated a supply chain may be, it’s only as strong as its weakest link.
The Risk of Over-ambition – Boeing’s 787 Dreamliner
The situation:
It was the mid-2000s, and Boeing was busy trumpeting its shiny new, commercial airliner – the 787 Dreamliner. It would reshape the skies with its advanced materials, greater fuel efficiency, and a design that promised to wow passengers, claimed Boeing. But beneath the surface, Boeing was facing a storm of supply chain challenges.
The failure:
In an effort to accelerate production and cut costs, Boeing made the ambitious decision to overhaul not just the Dreamliner’s assembly process but also its entire supply chain. What followed was a cascade of delays. Minor glitches, such as running out of fasteners, escalated into significant bottlenecks, causing the project to slip way behind schedule. Ultimately, the Dreamliner entered service over three years later than planned, with the first aircraft delivered in October 2011 instead of the original May 2008 target.
The lesson:
Boeing’s years’ long delay was a costly lesson in the dangers of underestimating risks and overextending capabilities, and that innovation should be balanced with careful risk management and realistic timelines.
The Risk of Too Much, Too Fast – Target Canada
The situation:
Target’s entry into the Canadian market in 2013 was highly anticipated. The retail giant planned to open over 100 stores across the country within a short timeframe, with a goal of establishing a strong presence quickly. However, the excitement was short-lived as the company faced significant operational challenges from day one.
The failure:
A catastrophic supply chain failure left the company’s expansion plans in disarray. The mega rollout plan, coupled with poor data management, resulted in widespread stockouts and shelves bereft of products, and frustrated customers. The root cause could be traced to poorly integrated supply chain systems causing mismatches between inventory levels and store orders. Within two years, Target was forced to close all of its Canadian stores and exit the market, costing the company billions.
The lesson:
The collapse of Target Canada is a cautionary tale about the risks of overexpansion and the importance of a gradual, well-tested rollout. Thorough market testing and the proper integration of supply chain data systems are essential to maintaining operational efficiency alongside rapid growth.
The Risk of Over-Reliance on a Single Provider – KFC UK
The situation:
UK residents will remember the chaos that unfolded in 2018 when KFC faced an unexpected crisis: a nationwide chicken shortage. For a brand synonymous with fried chicken, this shortage was nothing short of a clucking disaster.
The failure:
It all started when KFC switched to a new logistics provider, which was wholly unprepared for the scale of KFC’s operations. Their over-reliance on a single provider, coupled with inadequate contingency planning, led to widespread stockouts across the country. News outlets quickly picked up on the situation, with images of closed KFC restaurants and empty parking lots spreading across social media. The shortage became a national talking point, with some dubbing it the “Great Chicken Crisis”. The public’s reaction was swift and furious, as KFC fans were left without their favourite meal, and the company’s reputation took a significant hit.
The lesson:
If there’s one thing you should take away from the great chicken debacle of 2018, it’s that diversification in supply chains matters. Relying too heavily on a single provider can leave businesses vulnerable to unforeseen disruptions. Flexibility and robust contingency plans are essential to ensure that, when it comes to supply chain management, you don’t end up with egg on your face.
The Risk of Inadequate IT Integration – Hershey’s
The situation:
As the 20th century drew to a close, Hershey, one of the world’s largest chocolate manufacturers, decided to upgrade its IT infrastructure and supply chain management system. It was a move intended to streamline operations and ensure that the company could meet demand during its peak periods. Unfortunately, it has the opposite effect.
The failure:
The timing of the system’s rollout couldn’t have been worse. Hershey’s new system went live just as orders were flooding in for Halloween, one of its busiest seasons. Glitches and integration issues meant the company was unable to fulfil $100 million worth of orders, causing both a drop in sales and Hershey’s stock to plummet 8% in a single day.
The lesson:
Timing and thorough testing when implementing new IT systems should be your key takeaway. Before pushing the “go live” button, make sure your new supply chain systems are fully integrated and operational. Proper planning and a phased rollout will help avoid costly mistakes, ensuring your operations don’t melt down under pressure.
The Risk of Supply Chain Fragility – The Global Semiconductor Shortage
The situation:
Semiconductors are found in everything from smartphones and computers to cars and industrial machinery. So when a global semiconductor shortage kicked in during 2020, it sent shockwaves across multiple industries. The cause? A perfect storm of factors: a surge in demand for electronic devices during the COVID-19 pandemic, production disruptions from factory shutdowns, and geopolitical tensions affecting supply chains.
The failure:
The semiconductor industry, concentrated in a few regions, became a bottleneck for global manufacturing. The global shortage led to significant production delays and financial losses across industries. Automakers were forced to halt production lines, delaying vehicle launches and causing billions in lost revenue. Tech companies struggled to meet the soaring demand for electronics, leading to shortages of products like gaming consoles, smartphones, and laptops.
The lesson:
Supply chain diversification and resilience is important. Ensure your strategies include multiple sources for critical components and avoid over-reliance on a single region or supplier. Investing in domestic or regional manufacturing capabilities can help mitigate risks associated with global disruptions while building more robust and flexible supply chains will better equip your business to withstand future shocks.
The Risk of Chokepoints in Global Trade – The Ever Given and the Suez Canal
The situation:
In March 2021, the Ever Given, a massive container ship, became a global sensation for all the wrong reasons. High winds and poor visibility caused it to veer off course in the narrow Suez Canal, lodging sideways and blocking one of the world’s key trade routes. The incident halted global shipping, delayed hundreds of ships, and sparked a wave of memes as people worldwide reacted to the absurdity of a single ship disrupting global trade.
The failure:
Despite their interconnected webs, global supply chains can be remarkably fragile. The Suez Canal handles around 12% of global trade, so when The Ever Given blocked the canal, the resulting disruption was massive. This single point of failure had far-reaching effects, causing delays in everything from oil and gas shipments to consumer goods and manufacturing components.
The lesson:
Always be prepared for potential disruptions at critical points in global supply chains. Develop contingency plans that include alternative shipping routes and inventory strategies to mitigate the impact of such events. Again, diversification of supply chains and building flexibility into logistics operations are key to avoiding massive disruptions when unforeseen events occur.
Avoiding your own Procurement Failure
Don’t let your organisation become the next global headline. Instead, take proactive steps to fortify operations. Learn from others mistakes and embrace strategies that enhance supply chain resilience and flexibility. Diversifying suppliers, investing in regional manufacturing, and maintaining robust contingency plans should all be top priorities.
And most important of all, don’t let your supply chain be your weakest link – make sure it is strong, adaptable, and prepared for whatever challenges are on the horizon.
