With the internet bubble still full of hot air, the decade began with thousands of small companies clambering on the internet bandwagon with a good supply chain idea and enough venture capital to get into trouble. Now as we approach the end of the decade there are not many of those supply chain companies around. Some burnt out before they ever got a chance at an IPO, while others were absorbed by mergers and acquisitions as their star began to fade. Here are some of the decade’s most notable supply chain company failures.
Commerce One
The arch rival of Ariba was founded in 1994 and went public in 1999, but by 2004 it was all over. The company was a darling of the internet boom and Fortune 500 companies for its introduction of marketplaces in the electronic commerce sector. Commerce One provided software and services that enabled electronic collaboration to buy, sell, or make markets. Its flagship offerings included a procurement application and a market-making platform. It was courted by SAP and had high-profile clients such as GM, Ford and Boeing. But unlike Ariba it never did manage to generate enough income from these marketplaces and as the B2B market declines so did the company.
Baan
Baan was to be the new SAP and for a time it had high hopes but with financial irregularities and internal family dynamics it was all over by 2003. Jan Baan started the company in 1978 and by 1993 the company had an enterprise solution along the same lines as SAP. In 1994, Baan hooked Boeing as a client and the company was heading towards knocking off SAP as the number one ERP solution. But Baan was no SAP and the direction from Jan Baan was not forthcoming and the company stalled. Jan Baan withdrew from the day to day operations and there was the discovery of "creative" revenue manipulation. This led to a decline in share price along with law suits and consecutive quarterly losses. By 2000 the company was purchased by Invensys for $700 million. The Baan software was aimed at the mid-market, but by 2003, Invensys pulled the plug and sold the faltering Baan unit to SSA for paltry $135 million.
Webvan
Hailed by CNET as the greatest dotcom disaster, Webvan started in 1998 by Louis Borders, of Borders Bookstore fame, as a business that would delivery products to a customer in thirty minutes. The idea attracted big names of industry, such as George Shaheen, the head of Anderson Consulting, who joined as CEO as well as Goodman Sachs and Yahoo who both invested large sums of money. The company started the venture in ten markets a year after HomeGrocer, who by the time Webvan were starting was already having problems. Webvan mistakenly decided to get rid of the opposition by purchasing HomeGrocer in 2000 for $1.2 billion in stock. Despite most media and industry experts casting doubt on the profitability of a local freight company, Webvan went ahead with the purchase of delivery trucks and warehouses costing $30m, computer systems and office equipment without one cent of profit every being made. By April of 2001, Webvan announces that it will run out of cash by the fourth quarter of 2001 unless it receives additional funds. However, with the home deliver market being a tiny percentage of what HomeGrocer and Webvan believed, the company posted losses of $217 million by the first quarter of 2001 and declared bankruptcy in July 2001 after spending $697 million of venture capital.
