The Plan? What Plan? Oh, that Plan! There is NO Plan.

I wouldn’t blame anyone for not believing this story. It is rather unbelievable. Although I have changed the locations and names to protect the guilty, this actually happened and it would not surprise me to learn that it happens all the time.

Our company had a very large distribution center in the Pacific Northwest. It was more than just a distribution center for products produced by our operating plants. In fact, only about 20% of the center’s activities was devoted to moving our manufactured goods. The other 80% of the business that flowed through the center was comprised of a line of products that were purchased directly from outside suppliers and then resold to other customers.

These products were not part of our core business, required a totally different customer service staff, design engineers, sales people, accounts payable and receivable staff, computer systems, etc. It was a much more complex enterprise than our core business. The customer base was totally different as were the sales agreements. This “side-line” comprised about 20% of our company’s revenues, had 20 times as many customers and handled about 10 times as many SKU’s as our core business. It was a pretty healthy business in and of itself and made a nice contribution to our company’s bottom line. Over time we had been able integrate some of the general accounting activities into our corporate headquarters but not the major functions or systems.

Over the years, there were solid relationships built between the sales staff and the customers as well as between the suppliers and purchasing and design staffs. Of the 75 employees located at the distribution center, 40 were devoted to this business line.

I had caught wind that something was going on at corporate headquarters. We had lost a good deal of our core business at several plants and had lots of excess capacity and floor space at one of the facilities. You can guess what’s coming!

We were the type of company whose leader bounced from one strategy to another always looking for that low cost silver bullet and “miracle” workers to make lemonade out of lemon pits. He was out to prove the adage that “quality is free” – and, therefore, so should everything else.

My boss was a pretty down to earth guy but savvy and aloof enough to keep the top-level decisions a secret unless sanctioned by the president. I was heading out to the NW distribution center to help out with some auditing work when he popped into my office and closed the door. I was sworn to secrecy and told that it was very likely that the center was to be closed and the entire operation moved to another state where we had excess warehouse space. He asked me keep an ear open in case I heard any rumors while I was there. No one was supposed to know about this. I asked about timing and all he said was “soon.” Wow! This was a major event! Moving an entire business would be a major undertaking for the company.

The more I thought about it, the more complicated it got. With all those customer and supplier relationships, computer systems, etc. this was going to require a lot of thought and planning. The continuity of the business was at stake as well as the nice profit. I wanted to ask more questions but I sensed that my boss did not really want to talk about it any more. Despite his aloofness, I sensed that Bill had not really bought into this decision. I could always pick up those vibes from him. I took my trip, accomplished my task and returned with nothing to report.

About two weeks later, several members of the senior staff including Bill headed out on a mission. My phone rang at 3PM on the afternoon that they were scheduled to return. It was Bill. He was calling from his car on the way home from the airport.

“Well we did it,” he said,”It’s no longer a secret. The place will be closed in 60 days. We gave notice to the employees and landlord.”

“Whew,” I replied, “What’s the plan?”

“What Plan?” responded Bill.

“The plan for moving the business?”

“Oh, that plan!” he chuckled, “There is no plan.”

We ended the call.

It was not a joke. It was true. The employees and the landlord were notified that our company would be vacating in 60 days. The trigger had been pulled without a plan. Now the clock was running.

It seemed that the wheels starting turning very slowly after the senior staff returned. Being an engineer by training and interested in all things mechanical, our president began assigning the tasks of moving all of the conveyors, lifts, wrappers, stackers, inventory etc. to the junior engineers at headquarters. He always seemed fascinated by this stuff and so decided to concentrate on those tasks. He had set up a timeline that would guarantee that the distribution center could be phased out and the new warehouse phased in seamlessly through the judicious movement of the equipment. It was all so simple! He had even laid it all out on paper. The problem was that he hadn’t even thought about it until after the announcement had been made.

Unfortunately, the junior engineers had little experience in moving equipment and had problems lining up machine movers who could get the items relocated within the timeline and “budget” set by the president. The biggest SNAFU occurred when some huge conveying equipment was delivered to the new location but could not fit through the dock doors. Reconfiguring the new location to accept the new equipment was another nightmare and the installation seemed to take forever.

Meanwhile, the manager of the distribution center bailed out as did other key employees. The rush was on to get retention agreements with some of those that were left. But retained to do what, where and for how long? There had been no provisions made to keep and relocate any of them. It was assumed that they would just stick around and work hard until no longer needed.

Customers began screaming about back orders and demanding to know what was going on. They wanted to speak to their normal contacts but now most of them were gone. Many customers believed that we were going out of business. The headquarters sales manager for the “side-line” business was assigned to soothe the irate customers and set up a call center at our offices – the soon to be new home for the customer service function for the business. This was a real surprise to him as he had been kept in the dark about relocating the business until the last minute. It did not seem to matter to anyone that the customer service folks and order takers had quit or been released. Of course no one else was familiar with the products or customer agreements and even the sales manager did not know all of the details. New people had to be hired and trained in a real hurry. It was a customer relations debacle of the highest magnitude!

Integrating the computer systems was another disaster. Our president insisted that it should be as easy as “pushing a button.” A year and a half later, the button had still not been pushed. Everyone had to bounce back and forth between the two systems to get anything done.

The new warehouse personnel knew nothing of the SKU’s, shipping methods, storage methods, etc. for the new products. As it turned out, there really was not enough excess warehouse space at the facility where the distribution center’s business was moved or the personnel to handle it.

In the end, we lost about 50% of the “side-line” business. Our president insisted that the customers would come crawling back. They didn’t. Bill left the company and I was stuck holding the bag until I could follow suit. After he left, Bill told me that the company had reserved a sizable amount of cash to cover the relocation but it was just a quick estimate and hastily contrived. As it turned out, the costs came in at twice the amount of the reserve causing a large increase in our debt load and problems with our lenders. Had any savings been contemplated by making the move, I’m certain that they were eaten up with the lost business, cost overruns and interest on the debt. .

What in the world were these guys thinking? To undertake a venture like this without a well thought out plan was inconceivable. Could someone have actually thought that they could simply snap their fingers (or push a button) and pull this off? I knew that Bill wasn’t the type to sanction this sort of folly. His departure might have even been his vote of no confidence in it.

Perhaps in the minds of some of our brilliant business leaders, having no plan is better than having one and failing at it. Maybe it is pure arrogance and the need to hold all of the cards and not share information. Afterall, we minions are only expected to “execute.” We should start to plan ONLY after we have been graced with the assignment and regardless of short notice.

While the results may have been the same, had we all been brought into the planning process at some level, at least we would have given it a damn good try.


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