Adidas is a multinational company, originating in Germany. The successful company produces over 900 million products per year. This great success is not without its shortfalls. Adidas’ distribution center in Spartanburg, South Carolina faced a warehouse management disaster in 1996.
What Went Wrong?
In the initial stages leading up to the warehouse disaster, Adidas used an efficient warehouse management system. In fact, their distribution system won them awards like “Warehouse of the Month”. But, Adidas wanted to surpass all of their competitors with the best of the best distribution system. This made them want to improve their system even more!
Adidas Warehouse Meltdown
4 main problems with the Adidas warehouse meltdown:
- Initial mistake: Adidas chose a new warehouse management software to use. However, it wasn’t compatible with their vendors’ software and Adidas ignored employee warnings about problems this would cause.
- Resources wasted: Adidas put heavy amounts of funding into adjusting their new software to be compatible with their vendors’ software. This became a waste of time and resources, causing Adidas to eventually switch software again.
- Second mistake: Adidas chose a new software that still was not fully compatible with their vendors’ software. This second software used heavy automation, complex logistics and integrations. Time was of essence and Adidas went live with their new system before it was ready.
- Disaster: The new partially implemented system failed to work. Due to this, Adidas was unable to effectively process and ship their orders. The problem hit the company hard and it took many months for Adidas to get the system up to working standards.
Results
The lack of orders being shipped and processed resulted in heavy setbacks for Adidas. It was estimated that the company only filled 20 percent of the $50 million orders in North America. This massive warehouse management failure also led to Adidas suffering severe market share losses. Many employees in IT services and logistics left the company after their warnings proved true.
The Adidas warehouse failure was so disastrous that it made the front cover of Information Week magazine of the time and was titled “Meltdown”.
Lessons Learned
It is necessary to seek advice before implementing large scale projects. Experienced Adidas employees warned the company of problems with their new systems. However, Adidas ignored them. Research the best warehouse management system for your company’s needs before implementing!
