Operations Turnaround Improves Profitability

Bradley Caldwell

Hazelton, Pennsylvania

Challenge

Pet and Garden Product Distributor. $175 million sales. $25 million debt. Distributing to companies in 24 states from 2 distribution facilities. Over 30,000 SKUs.


  • Family owned company that had recently seen margins squeezed and profitability reduced.
  • Company had relocated part of the warehouse to a new facility to improve operations. Unfortunately, the change had the opposite effect and delays had become frequent.
  • Deliveries were delayed or cancelled as a result of the warehouse issues. Inventory replenishment shuttle transferring product between the two distribution facilities inefficient and expensive.
  • Delivery routes were not optimal due to customer demands and the expansive network of customers in multiple states.
  • Owner was looking for a strong management team but had struggled to find the right people.

Solution

  • Team met with management to fully understand past decisions that were affecting profitability.
  • Hired as Interim COO to address operational issues and help implement change.
  • The warehouse layout was revamped moving high velocity items closer to the staging area to improve efficiency.
  • Recommended adding 25% of additional racking to minimize new facility difficulties and to rearrange inventory at new facility.
  • Reviewed operations of the warehouse, sales department and processes as well as trucking and logistics operations.
  • Analyzed customer and item profitability.
  • Recommended implementation of new delivery routing software to handle complexity of distribution to multiple states with a large customer base.

Results

  • $5 million of cost savings were identified by MorrisAnderson.
  • Our team oversaw a layout change in the warehouse to ensure improved picking operations to reduce delays and improve efficiency.
  • Identified unprofitable customers and set up minimum requirements including delivery size and minimum margin.
  • Identified obsolete SKUs and worked with client to eliminate SKUs to increase inventory turns, improve cash flow and improve warehouse efficiency.
  • Determined trucking improvements that condensed routes, reduced the number of units needed and improved efficiency in delivery.

Daniel F. Dooley

Dan Dooley, CTP, is a Principal and CEO at MorrisAnderson based out of Chicago. He has a strong national reputation in crisis management, operations improvement, debt refinancing/restructuring and C-level positions. He is a frequent speaker at industry conferences and a regular author for industry periodicals. Dan has served on the Board of Directors of both… Read More