In May 2001, Nike announced that it had lost sales in the preceding quarter because of problems in its supply chain. The amount of income lost was impressive: a cool $100 million. Three months later, Cisco Systems announced that it was writing down unusable inventory due to some confusion in its supply chain. The amount of its write-down was even more impressive: $2.2 billion. Isolated incidents? Only in terms of magnitude—supply chain failures are becoming increasingly common, and they are costing companies dearly. In addition to their impact on profits, problems in the supply chain have a devastating effect on stock prices, causing an average loss of $350 million in shareholder value with each reported incident. That's a steep price ...

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