Name: Ayesha Muneer

Roll Number: Fa18-bba-031

Date: 17th march, 2021

Submitted to: Sir Arfeen

Gohar

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. Some of these are Toysrus.com,
Babiesrus.com, eToys.com and FAO.com. 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 a
crucial role. Missing a delivery date or failing to order a part on time can have numerous
repercussions, beyond the immediate situation. Missing a deadline reflects poorly on
brand image and can have a wide reaching financial cost, including incursions caused by
immobile staff, additional transport and potentially even loss of clients. We can avoid this
by creating specialized systems to facilitate easier communication across all areas of the
 business. Regular shipment updates and schedules can be accessed throughout the
company, meaning that any delays are anticipated and planned for.
 Poor supply chain visibility: Because of the gaps between their overall system they
were unable to figure out the way to fulfil the exceeding amount the 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. Logistics 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.