The High Cost of Failure

Invacare Corporation (NYSE: IVC), headquartered in Elyria, Ohio, is the global leader in the manufacture and distribution of innovative home care and long-term care medical products that promote recovery and active lifestyles. Invacare had 2005 revenues of about $1.5B.

They are also one of the few companies to actually admit, in a press release, that their screwed-up ERP implementation caused a loss for the last quarter of 2005.

I suppose they are pretty brave — after all, project failures happen all the time, but few companies actually come out and acknowledge it. Usually, you hear about this kind of thing in government projects, which tend to be more public.

Don’t you wonder how this kind of thing happens?

In the words of their press release:

"These issues have resulted in lost revenues due to difficulties in processing orders and the inability to ship products to customers within required lead times. The implementation is also resulting in additional overtime in manufacturing, distribution centers, and customer service, along with added costs to expedite product to customers and is resulting in processing a higher than normal level of returns."

Here are the vital stats:

Project cost:  $20M
Estimated loss attributed to the project: $30M
Standing back in wide-eyed amazement: priceless