Northeast Cooperatives was a $100 million annual sales natural
foods distributor based in Vermont. It
had accounts in the Northeast, split between health food stores and supermarket
chains.
We got a recommendation to them from Blooming Prairie. I talked with the General Manager briefly and
then waited for a call from a project manager that came a few months later.
They wanted to expand their warehouse to bring in non-food
from an obsolete and inefficient facility nearby. They emphasized a low budget project. We agreed to visit and discuss their needs.
It turned out that they had a beautiful new office and
warehouse building designed by a local architectural and engineering firm. To keep costs low they had only built enough
warehouse for fast moving products in grocery, frozen and refrigerated and had relied
on in house people for layout and racking ideas.
We thought that the space was too tight for a reasonable
operation. Docks were too small, aisles
too narrow and the building really was too high, creating congestion and higher
operating costs for the fork lift truck oriented operation that they had.
Additionally they had poor coordination between buying and
warehousing so that the warehouse was frequently stocked beyond its capacity.
Nonetheless, I suggested that the height and narrow aisles
would be adaptable to a more mechanized operation that would store and handle
product more efficiently, provided that they kept discipline in ordering.
I offered to do an analysis and they accepted, especially
after I pointed out that this analysis was valid whether they adopted a more
mechanized concept or not. They
commenced to collect the data to process through our proprietary warehouse space
planning system.
Our process called for simulating sales and item growth by
adjusting item movement, and cloning additional items from existing items to
simulate item growth. The analysis went
very well at one level, in that our process and system performed
beautifully. We were able to get good
results in some areas but not in others.
This was primarily due to faulty and ambiguous data such as case packs
and case measurements for certain items that had inner packs. Finally the deadlines for construction and the
beliefs of the internal people and architects prevailed and they developed the
new space so it was not well integrated with the existing space, and more of the
same high-rise forklift oriented layout.
Our comment to ourselves was: If you liked our vision and
hired us, why didn't you follow through to get the study you paid for to be
fully accurate and meaningful?
We soon had our answers.
First, the business was under a lot of financial
pressure. Second, people were
leaving. Third, the CEO, who met us and
bought our vision wasn't interested enough or at least able to follow
through. Fourth, there was a notion that
technology was bad and not to be trusted.
And all of this was on top of the politics created by the A&E firm.
So as few months after we were finished with our work, our
contacts had left and the company was sold to a larger distributor.
This company was somewhat like Blooming Prairie, although at
the time we thought more advanced and mainstream. As became evident they were not able to do
their job in the competitive world.
