Why The Most Sophisticated Supply Chains Fall Apart In The Last Few Links

In what is surely a retail tech addendum to Murphy's Law, the more sophisticated and elaborate a retailer's supply chain strategy is, the more it's likely to fall apart in the last few feet and, naturally, when it's needed most.

I was reminded of this when shopping this past holiday season in a major national chain and wanted a particular model product, which the store was out of. "No problem," I was told by a store associate. "We'll have a large shipment in just a few hours. It may be in there."

Conversations with store customer service and the store's general manager—who happened to walk by—made it clear the store had no way of identifying the contents of the truck, which was just a few hours away. Clearly, it had already been fully-loaded by other employees of this chain so the information should be known, no?

Various supply chain players said such a situation is often not a technological problem as much as a psychological one. For example, if a regional manager has decided the store won't get as many of the ultra-hot Widget Du Jour as the store wanted, the regional manager might be trying to avoid an argument. "Once they discover we only gave them ten when the truck is unloaded, they realize it's a done deal and won't bother complaining," the regional manager might say.

The problem is fairly common, said Shoshanah Cohen, co-author of a supply chain book ("Strategic Supply Chain Management: The Five Disciplines for Top Performance") and a director of PRTM.

"When a hot product is not available in a retail location, odds are good that product is in high demand in other locations as well. Most companies use sophisticated allocation algorithms to determine where distribution inventory will end up. A retail location can be denied inventory it had ordered because the algorithm determines it is more optimal to send it elsewhere," Cohen said. "So it has been ordered and the store expects it (and tells the customer it is coming), but it doesn't arrive. Most store managers are too busy to go back and confirm that what they ordered is what's actually coming."

Getting full access to supply chain data is a good thing, but getting access to flawed data can be worse than getting no data at all. Does this justify denial of access? No. Does it happen anyway? Sure.

"The holiday season is a frantic time for electronics retailers and the environment within a distribution center can be highly chaotic as people scramble to fill orders. Tools such as barcode scanners have greatly reduced errors related to manual data entry, but they can't prevent someone from putting the right box on the wrong truck," Cohen said.