Dear Kaleidescape Dealer,

As you may know, Kaleidescape has experienced abnormally long delays in fulfilling orders during the past few months. After many years of reliably shipping tens of thousands of orders, we are embarrassed to have caused this problem for our dealers and their clients, and we sincerely apologize.

The origin of this problem occurred over a year ago when our contract manufacturer (CM) introduced a configuration error into their parts inventory scheduling system that they use for our Kanban manufacturing method. That error manifested itself a few months ago when our CM began running out of certain components, some of which have long lead times. It took us several weeks to realize how serious the problem was because we were measuring our order fulfillment performance using misleading statistics.

Fortunately, our dealers let us know that something was wrong! That led us to investigate and correct the configuration error. We also corrected some manufacturing processes that contributed to the problem, and we adopted better metrics for measuring our order-fulfillment performance.

These parts shortages resulted in significant periods of time when our CM could not manufacture our Disc Vault, Disc Server, and 1U Server. Our other products were not affected. However, many international orders were delayed in their entirety because import regulations make it very difficult to ship partial orders.

We have taken many steps to improve our order-fulfillment process, and to make it more predictable. Our shipments are now completely caught-up, and our parts inventory is back to normal. Our CM has built a substantial finished-goods inventory that will enable us to fulfill future orders from stock. We shipped every new order since the beginning of last week in four days or less. Starting next week, we expect to ship every new order within three business days. In addition, we are striving to ship every service order (service kits and replacement components) within one business day.

Please feel free to forward this email to any of your clients who were impacted by this problem.



Cheena Srinivasan
Founder & CEO
Kaleidescape, Inc.