Supply chain matters. Underestimate it at your own peril.

It's time for senior level executives to pay closer attention to what happens in their warehouses, DCs, logistics and manufacturing operations. Those who underestimate its importance may pay a high price.

By Bob Trebilcock, Editorial Director

January 13, 2016

I was a huge fan of the show Justified, about a U.S. Marshal who does his best to keep the peace in rural Harlan County, Kentucky. One of my favorite characters was Constable Bob. Played by the actor Patton Oswalt, Constable Bob looked like the kind of short, pudgy loser who spent high school giving away his lunch money. But appearances can be deceiving. Underneath, Bob was one tough hombre. In one episode, he takes a terrible beating rather than give up the location of a witness the bad guys want to kill, and in the end, gets his revenge on his tormentor. As leading man Raylan Givens says to folks who were astonished that Bob took out the bad guy: “People underestimate Bob at their own peril.” 

You might be wondering what a cable TV program set in Appalachia has to do with supply chain management, but I think there’s a lesson to be learned from Constable Bob. What we do day in and day out matters, but, too often, executives ignore their supply chains at their own peril. Over the last year, we’ve published any number of articles about the frustrations of supply chain managers as they try to bring what we do to the attention of the C-Suite. It’s a theme repeated at virtually every conference I attend. Too often, manufacturing, transportation, distribution and sourcing are seen as non-strategic to the enterprise. I’d argue that, like Constable Bob, C level executives ignore us at their own peril.

For a case in point, look no further than Finish Line Inc. On January 7, the athletic retailer announced that it will close up to a quarter of its 600 stores and replace its CEO following a quarterly loss of $21.8 million versus a profit of $2.6 million during the same prior year period.

The culprit: “Our third quarter performance was severely impacted by a disruption in our supply chain,” Glenn Lyon, the soon-to-be-departed CEO, said in a press release. Specifically, Finish Line implemented a new warehouse and order management system in September and reported that come October, it began to experience issues getting fresh inventory into the stores as well as fulfilling online orders to support its sales plans. Finish Line told analysts it estimates that it gave up as much as $32 million in lost sales and had to bring in third party experts to fix the problem.

I haven’t spoken to anyone at Finish Line, so I’m hesitant to comment, other than to ask: What was the executive team thinking when it green-lighted a new WMS and order management system during critical make-or-break back to school and holiday seasons?

Which brings me back to my original thought – What we do in the supply chain matters; at a time when anyone can order anything from hundreds of retailers and e-tailers, senior level executives underestimate it at their peril.