When supply chain management goes bad?

Is poor supply chain management software to blame for the fall of British retailing icon, Mothercare?

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By  Neil Denslow Published  August 29, 2002

The importance of supply chain management has been highlighted at, British retailer, Mothercare, which has issued three profit warnings in a year and seen its share price plummet.

The retail giant has been beset by supply problems, despite having implemented a comprehensive supply chain management system. It uses a mix of software vendors, including Kewill Systems, which also supplies systems for Marks & Spencer's.

Mothercare’s main warehouse is run by logistics group Tibbet & Britten and uses software supplied by Manhattan Associates. That this partnership seems to cause no problems for Debenhams shows how more than technology affects supply chain management.

The chain relies on four integrated computer systems to manage the supply chain, but as Mark McMenemy, Mothercare's finance director and acting chief executive, admitted to the Daily Telegraph, "with these systems, the quality of the information you put into them determines the quality of information you get out. The systems work adequately. It's how well managed they are [which is the issue]."

Among the problems to have been noted at the year-old warehouse are incorrectly labelled crates arriving from suppliers, which led to erroneous data being entered into the system. The crates were then stored in the wrong place in the warehouse making them impossible to find.

Tibbet & Britten say they have now solved these glitches, however even after Accenture were called in for a two-month project earlier in the year, the supply chain still seems to be suffering from over-supply in some areas and shortages in others.

"The problems are due to three reasons. Ineptitude, poor systems and the poor take-up of product through the stores," an anonymous source told the Telegraph.

Critics contend that the company’s latest profits warning, which Mothercare blamed on poor sales, was actually the result of poor planning software and over-ordering. McMenemy says "[it] was not over-ordering, it was a trading issue. We ordered stock against a plan. It arrived, but failed to sell."

However, the retailer had to suspend suppliers’ deliveries earlier in the month, as the warehouse was full. Furthermore, it is opening three discount stores in an attempt to clear excess stock.

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