Thursday, August 25, 2011

Lessons from the demise of TouchPad

It was Saturday morning and I am at Best Buy standing in line outside the door waiting for the store to open. There were around 20 people with me, all excited to get their hands on the $99 TouchPads. The door opens and we all walk in and start looking for TouchPads, only to be told by the sales staff that they have none in stock. Everybody is flabbergasted that the store has lots on stock the previous evening and none this morning. We all return empty handed.

I started following a Twitter feed for tips on where to score one. And, I do get a tip that it is in stock at I immediately rush over and place an order for my TouchPad. Everything goes smooth and my order in place, I relax for the rest of the weekend.

Monday arrives and I get an email from BN and I immediately open it to see when my TouchPad is arriving. But, to my dismay, the email says:
Due to unexpected customer demand for this item, our inventory was depleted prior to your order being processed so we are unable to fulfill this item as requested. Consequently, we have canceled your order and you will not be billed for this amount.


Later on, I hear that another of my friend's order met with the same fate, albeit with another retailer.

What this tells me is that Best Buy had a lapse of communication, corporate not relaying the information to their stores in a timely manner. I did hear that the same store sold the TouchPads later during the day.

And, the Order Management (OM) system is not integrated with the Supply Chain and Inventory Management system at B&N. The OM system doesn't have a clue of the real-time inventory. They didn't have a clue what their Available To Promise (ATP) was. If BN had an integrated multi-channel OM system that was in sync with their Inventory Management system, this would not have happened.

What the TouchPad fire sale showed us was that most of the retailers are yet to mature in managing their multi-channel OM, Inventory and ERP functionality. This is a tremendous opportunity for them to squeeze more profits out of their supply chain by maximizing their supply utilization and inventory productivity. Maybe, the brick and mortar retailers can still survive (for some more time) if they get their houses in order and streamlined to reduce costs.

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