A post-acquisition operations turnaround

The problem

After the company acquired three regional distributors, fulfillment fell apart. Fill rate dropped to about 75%. Shrink ran 17–18% for the month and hit 28% in one week, with full pallets of food thrown out. On-time delivery fell as low as 24%, about 22% of orders shipped with an error, and a physical count found errors in 90% of storage locations. Nightly replenishment jobs jumped from about 70 to over 300. The operation was burning about $1M a month in contribution margin.

The root cause

It was tempting to blame the crews. The gap analysis found something more precise: the warehouse had been physically rebuilt, with new racking, a new freezer, and hundreds of new locations, but the warehouse management system's logic was never updated. Old locations kept their old rules, new ones had none, and many had no dimensions entered.

So replenishment sent product to slots too small to hold it, left others empty, and scattered single SKUs across as many as 886 locations. The system recreated the mess faster than crews could clear it. There had also been no full inventory count of the acquired businesses, so counts weren't trusted and product was double-bought.

What we did

We ran two tracks at once, because neither worked alone. Track one stopped the bleeding by hand: daily triage to clear staging lanes and trailers, replenish the top 1,000 items, consolidate each SKU to one location, and cycle-count by aisle, with corporate staff trained and on the floor.

Track two fixed the cause. We rebuilt the WMS into a hybrid slotting model (fixed locations for fast movers, dynamic slots for the rest), re-zoned the facility to the new racking, and added logic to consolidate inventory instead of scattering it. Then we added barcode scanning with QA hard-stops across receiving, picking, loading, and delivery, and wrote it all into daily standard work.