Assignment # 1

Company: TOY ‘R’ US

Toys "R" Us is an American toy, clothing, and baby product retailer owned by Tru Kids, Inc and
various others. It was founded in April 1948 by Charles Lazarus, with its headquarters located in
Wayne, New Jersey, in the New York metropolitan area. They are children’s mega store with
over 1800 locations worldwide. There is a wide range of products to cater to any gender, age, or
area of interest. Toys "R" Us also has many e-commerce sites.The organization had been in the
toy business for over 65 years and worked around 800 stores in the United States and around 800
outside U.S. These numbers have consistently decreased with time. However, with the increase
in mass shippers, just as online retailers, Toys "R" Us started to lose a lot of share in toy market.

What went wrong and how they failed?

Christmas 1999
In 1999, online retailing was at its peak and holiday season was going on and Toy R Us usually
see major demand spikes in this season which put a lot of pressure on supply chain so they added
a new online store and did a highly successful advertisements. Toys "R" Us put a great deal of
advertising efforts into driving clients to their online store. Before Christmas they promised to
deliver all the orders placed by December 10. Toys R Us.com began to swamped with tens of
thousands of orders. Though the inventory is mostly in place, the company simply cannot pick,
pack and ship the orders fast enough – though it was close. Some employees worked 49 straight
days. Just a couple of days before Christmas, the company sends out thousands of now infamous
“We’re sorry,” emails, telling those customers their orders will not arrive in time for Christmas.
Hence, Toys "R" Us encountered a barrel of negative PR and reaction from unhappy clients.

The issues with Toys "R" Us' online framework were occurring a long time before the statement
of regret email were sent. In November of 1999, they were at that point having issues managing
traffic volume on their site. Therefore, they needed to limit access to the site to hold the servers
from crashing. In spite of this cutoff, the orders actually kept on pouring in. The volume was
overwhelming and they could not meet the demand. Eventually they outsourced fulfillment to
Amazon.com. Following are some reasons for this failure and strategies to avoid them:

 Poor demand forecast: The number of orders piled up at their online stores before
Christmas were way more than those being forecasted. The peak in volume was much
larger than they were predicting. So inaccurate forecast is one the reason for their failure
Solution: Demand forecasting forms an essential component of the supply chain
process. It’s the driver for almost all supply chain related decisions. While demand
forecasting is undeniably important, it’s also one of the most difficult aspects of supply
chain planning. Demand is often volatile making demand forecasting both an art and a
science. It will help them in better allocation and utilization of resources, optimization of
inventory level and will facilitate performance management. It can be done by setting
forecast level closer to customers and by focusing on demand forecast, not sales forecast.
 Poor communication: Many customers believed Toys “R” Us’ customer service hit
an all-time low with minimal communication before December 23rd. A heads up earlier
in the game or more efforts put into delivering the orders would have left customers
satisfied. Some customers wished Toys “R” Us had just communicated the issues earlier
 so they would have had more time to find replacement gifts. This is a prime example of
how important communication and supply chain visibility is in providing excellent
Customer service.
Solution: In any business with external operations, business communication plays an
important role. Missing a delivery date or failing to order a section on time will have
various repercussions, beyond the immediate situation. Missing a point reflects poorly on
complete image and may have a wide reaching monetary cost, as well as incursions
caused by immobile staff, additional transport and doubtless even loss of clients. we are
able to avoid this by creating specialized systems to facilitate easier communication
across all areas of the business. Regular cargo updates and schedules will be accessed
throughout the company that means that any delays are anticipated and planned for.
 Poor supply chain visibility: Because of the gaps between their overall systems
they were unable to figure out the way to fulfil the exceeding amount of orders and
providing on time deliveries.
Solution: In order to have accurate, on time deliveries every time, logistic companies
need to have full visibility on all aspects of the supply chain:

Shipments ought to be tracked, to ensure they are following the prescribed route and
schedule, and in case of disruptions, notifications and alerts be activated so that prompt
action can be taken. Customers need to get updates, viz., shipping notifications, ETAs, as
well as be able to track shipments on a web portal. Companies need to have visibility on
the entire work flow in a warehouse – receipt of inventory, storage, order management
and completion, and shipment. Plus – visibility on what is headed towards them, so that
they can plan their workforce accordingly.
 Low Technology: Toys “R” Us realized it could not deliver. Did they have the inventory
to fulfill orders? Yes. But, they did not have the time or workforce to put the orders
together which shows their low tech system and poor advancement that were consuming
more time and workforce
Solution: Adopting new and innovative technology solutions has become imperative for
companies. Given that labor is scarce, competition is intense and customers have become
more demanding, technology advancements can increase productivity by minimizing
time, cost and errors. Automation systems / data driven software solutions such as
advance packaging labelling, warehouse sorting etc. have become the need of the hour.
Shipment tracking systems enable companies to monitor their shipments round the clock,
get alerts and notifications, and set up customized reporting. Data Analytics can help with
Improving customer experience, operational efficiency and safety.
Robotics and autonomous machinery have been adopted by many key players in the
industry. These help in drastically cutting down time taken for order completion and
delivery. IOT can play a key role in reducing risks and ensuring safe delivery of goods.

Impact of these recommendations on customers and

companies:
In many companies, improvement of the supply chain management system is taken into
account mostly from the logistic purpose. By understanding and focusing on real
enhancements to a supply chain, it’s experts and controllers will work more closely
together
With an easy analysis, it’s clear that a corporation will gain a lot in a very short time.
Companies will not miss out on opportunities as a result of that they will have the
complete image in front of them, and they will think in an elaborate manner. If you would
like to understand the particular savings, you want to calculate the impact of winding up
changes in your supply chain management system on operational costs, service provision,
operating capital, and most importantly, the revenue of the company. Only then you'll be
able to possibly determine to what extent supply chain improvement can really trigger
your profits.
When the suitable tools to manage complexness are in place, organizations have larger
opportunities to endlessly produce operational efficiencies and keep customers happy.

REFERENCES:
https://clearspider.net/blog/supply-chain-management-disasters-toys-r-us/
https://fleetroot.com/blog/top-10-challenges-facing-logistics-companies-in-2019/