By Meg Gee, 13th September 2021

Think your business is too big or small to avoid inventory mistakes? Think again. Tracking goods and performing stock checks is mundane, but as we see time and time again, supply chains have the capability to be destroyed virtually overnight. Did you know JP Morgan Chase lost nearly £6 million in 2012 because of errors on their Microsoft Excel spreadsheets? Or Nike in the early 2000’s losing around £100 million due to issues with their returns tracking system.

Below are seven companies that lost control of their inventory, and cost themselves millions:

1. ASOS – faulty inventory and returns management

With a total of nearly 85,000 SKUs, ASOS is an e-commerce brand with a lot of stock. Whilst their new shiny inventory management system was successfully sending out and fulfilling orders – nothing coming back in was being recorded – for a whole week. The problem centered around an inventory system intended to register what was in the warehouse and update availability on the company’s website. Unfortunately for ASOS, the system wasn’t pulling in any returning orders. Combine that with supplier issues, and available stock being restricted for customers across the world? Profits dropped 68% year-over-year for the 2019 fiscal year.

2. Ralph Lauren – inventory cuts and restructuring  

In 2016 Ralph Lauren appointed a new chief executive – Stefan Larsson. Stefa’s first task? Cut costs in inventory and warehouse management. That meant a ‘refocus’ on the brand’s best-selling labels, cutting it’s different layers of management and closing stores. The result of such dramatic changes? Profits plummeted 50 percent in the two years to follow. The brand had an inventory lead time of fifteen months which kicked up several issues. Firstly, the company couldn’t be responsible when it came to being reactive with trends. Secondly, holding on to so much excess stock was expensive. Third, Ralph Lauren’s inventory grew by 26% over three years, but sales only grew by 7%.

The end result? Lots of discounted stock, lots of promotions, and a desperate need to shift shock

3. Nike – poor inventory implementation and testing

As one of the most recognized athletic brands and manufacturers in the world, Nike has a lot of stock to manage. As a result, it’s had difficulty in the past regulating inventory. In 2001 the brand failed rather catastrophically when implementing software to manage their supply chain. They installed the system of demand management without testing it properly. The result was too much stock of the low circulating products and too little of what customers really wanted. Even their most popular products like Air Jordan’s weren’t matching the clear demand of customers. Whilst it was never fully confirmed, this cost the company a loss in sales of $100 million dollars.

4. JP Morgan Chase – Microsoft Excel spreadsheet errors

An unfortunate error in the spreadsheets used by JP Morgan Chase to mark up different risks left the company declaring just under £6 billion in losses back in 2012. These inventory errors came from a combination of copy and paste mistakes as well as faulty formulas within the excel spreadsheets. Sounds like an all too familiar story? Find out how your business can make the switch from spreadsheets to software.

5. Marks and Spencers – failure to stock enough of popular demand

Marks & Spencer admitted failure to stock enough clothes in popular sizes during autumn of 2019. They called it a “challenging period” for their clothing and homeware business. After-sales falling 2.1% in the space of a few months the brand quickly released this inventory oversight was costing them almost £5 million. As well as poor availability of stock, the brand also admitted to too much stock and markdown on their clothing line.

6. KFC – supply chain errors and new partners

Who could forget the infamous KFC #chickencris of 2018? Not us. In a press release, the fast-food giant stated: “We’ve brought a new delivery partner onboard, but they’ve had a couple of teething problems – getting a fresh chicken out to 900 restaurants across the country is pretty complex!”. As a result of changing their delivery partner, around 750 outlets were facing delayed delivery of fresh chicken, meaning their restaurants couldn’t supply to customers. At the time it was said KFC would have been losing up to £1 million per day lost. Whilst this may not have been as a direct result of their own inventory management, it goes to show the importance of taking your time when it comes to choosing a new supplier.

7. Target – failure to expand smoothly and poor training

In January 2015, Target announced that it would be closing all 133 of its stores, only a year and 10 months after they opened in March 2013. In their rush to get stores opened as soon as possible, Target assumed they could repeat the success of their U.S stores.  

This was apparent when they bought the leases of 124 Zellers supermarkets to turn into Target Canada stores by 2013. The restricted timeline forced Target Canada to put inexperienced staff in charge of managing a new inventory system different from the one used by the parent company. Unsurprisingly, they were setting themselves up for what turned out to be an inventory disaster of $5.4 billion.

The main takeaway of all this? No business is safe from underestimating the importance of their inventory. Whether that’s being more thorough with your processes for finding new suppliers, or always ensuring you’re meeting demand – the key is carefully to consider the implications of any big changes your business might be undergoing. Check out our blog to find other articles on how to learn from other businesses and optimise your own inventory.