Lost Manufacturing Capacity & Recovering Shelf Space

Clorox had suffered a cyber incident on their enterprise network, not OT, in August of 2023. They lost 26% of their manufacturing capacity during that quarter as they had to move to manual order processing.

Clorox shared minimal details on the incident. I reviewed the transcripts of their analyst calls for the next two quarters to see if there was more detail. I was somewhat surprised there was little or no talk about the cause of the cyber incident or what Clorox is doing to prevent it to happen again. The analysts focused on how the incident would affect future quarter sales and earnings.

Lost shelf space was a big concern. When Clorox couldn’t deliver product, stores put other products in place of the usual Clorox products. When would Clorox get this shelf space back? If the product isn’t on the shelf, it can’t be sold in physical retail. The impact on future quarters was a bigger issue than the $47M (recovery costs and increased COGS) in the current quarter.

I imagine customers also don’t care, except for curiousity, why their favorite Clorox product isn’t on the shelf. They want to know when it will be back on the shelf.

This is yet another example why recovery should be prioritized in OT. If Clorox had been able to recover its order processing in days and run some extra shifts it wouldn’t have been a material event.