Daily Archives: January 20, 2013

Sourcing Innovation’s Big Prediction for 2013, A Summary

Over the past week, Sourcing Innovation has revealed its big prediction for 2013. In particular, it predicted that a variant of the conversation detailed in Parts I and II between a CEO and a CFO will happen in more than one Global 3000 firm this year. What was the jist of that conversation?

In Part I, we found out that upon his return from a luxury vacation, a CEO discovered, in his first conversation with the CFO, that the sales on the new product line were zero … because the product never arrived! The new distribution deal with Automated Crossdock Co — negotiated to take the goods direct from the manufacturer’s warehouse to the retail stores — turned out to be worthless as the supplier refused the trucks entry. When the CFO tried to find out why, he was continually given the runaround. And, at least three weeks after product was supposed to hit the shelves, there’s no product in sight.

In Part II, we find out that after repeated calls to the overseas law firm, the CFO finds out that the supplier has gone bankrupt. At first, the CEO thought this would be no big deal, as demand could just be shifted to the next supplier on the list, but this wasn’t the case because the product required a special machine to produce, that only the supplier had. And while another machine could be ordered, it would take about 6 months to custom build, ship, and install at a new supplier location. So it turns out to be a very big deal because, not only is the product line essentially shelved, but the company could end up filing for bankruptcy as sales on existing product lines had declined to the point where the company was losing money. And, despite expectations to the contrary, thanks to a lawsuit settlement, a severe IT upgrade cost overrun, and big management bonus, the company doesn’t have the cash reserves to last six months. As a result, the CFO is already starting to prepare for a bankruptcy filing as they see a proactive planning as their only chance of survival.

In Part III, we reviewed the learnings from parts I and II to try and discern if the company’s predicament was really the supplier’s fault, as indicated by the CEO, or if it was the company’s fault. We reviewed the seven major learnings and determined that, on their own and together, the facts were pretty damning against the company. But we concluded that, despite all of the company’s failings, which were numerous, had the supplier not failed to deliver the product before going bankrupt, the company would have survived. So who was to blame?

In Part IV, we offered you more insights into the situation by giving you a piece of the conversation that took place between the supplier’s CEO and CFO weeks before and a piece of another conversation that took place between the CEO and the CFO that took place months before. And then … we said you had to wait for part V for the answer.

In Part V we gave you the answer. The blame lied entirely with … to the delight of the Grinch … the company! Why? Re-read the entire series to understand!