From the editor Featured

9:57am EDT July 22, 2002

I have overdosed on information about the Year 2000 computer problem, and I am certain that the worst-case scenarios are tremendous exaggerations of what will actually occur.

So why is SBN running a cautionary piece on the subject? Because any way I look at it, if anyone suffers, it will be business owners; and the smaller your business is, the bigger the problem.

Before you decide I’m just another alarmist and turn the page, let’s assume that the impact of Y2K is minimal — scattered brownouts, occasional equipment failures and some random errors in computer programs across the country. But your systems indeed prove Y2K compliant, and in homes across the country, life goes on as normal.

But in Detroit, maybe somebody missed a single line of code in the ERP system of a major car maker, and the system tries to order precisely as many steering systems for its SUV line as needed for the month of February — based on a lean inventory model and sales data as of Jan. 1, 1900. That data, of course, doesn’t even exist, and an alert manager catches the error. While programmers are trying to fix the bug, the word goes out to input the order manually, using last month’s numbers, plus 5 percent to be safe.

Nobody notices when the system automatically cross references the order with those of other components, and adjusts them upward to match the higher number of steering systems.

The orders are sent electronically to suppliers, who buy raw materials, schedule overtime and crank up production.

Within days, the error has been discovered and adjusted. But the suppliers have already spent the money to ramp up. Their margins are tight, and the auto makers have taught them well; the call goes out that cash is going to be tight this month and noncritical payables need to wait.

And so it goes down the food chain — one month after the next, through the hardware distributor, to its information systems consultant, to its public relations firm, to its printer of brochures ....

By now it’s June, and the car maker long ago installed the steering systems ordered in January. In fact, the Y2K glitch proved to be such a nonevent that consumer confidence has surged and car sales have actually picked up.

But somewhere along the way is a small business with 17 or 18 employees, chronic cash flow problems and an owner who is probably more lucky and determined than skilled.

And for the third consecutive month, he’s waiting for a check from a client he probably should have walked away from, who does business with someone who does business with someone who does business with a supplier of components in steering systems for a car maker in Detroit.

He’s about to dip into the home equity loan to make payroll. He’s going to have to drum up some new business fast. He should probably notify his banker, and maybe call his lawyer about the problem client. And one thing has become very clear: This isn’t the year he’s going to be able to buy a new car.

But ask him about Y2K, and he’ll at least be able to tell you, thank goodness, that despite all his problems, that was a whole lot of nothing.

Bob Rosenbaum (brosenbaum@sbnnet.com) is SBN’s editor. While his money is staying in the bank, he has a small cache of water and canned food in the attic — just in case.