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C&S Wholesale Grocers Hosts RC Section F

Roger Huffstetler particularly enjoyed “the interaction we had with the folks in the warehouse. The young man who led our tour was full of practical and insightful comments regarding how and why the warehouse was organized.”

After discussing C&S Grocers during a LEAD class, a member of section F used relationships he had with the organization to set up a site visit to the warehouse. Members of section F took advantage of the opportunity to get a hands-on view of one of the cases in action.

Earlier this term, RC students debated the merits of employing self-managed teams at C&S Wholesale Grocers, a warehousing and distribution company spotlighted in a LEAD case. CEO Rick Cohen graciously visited campus to describe his decision-making process, but New Section F wanted to know more.

What is it like to wander a 400,000+ sq. ft. warehouse? How
scalable has the team concept been? Could we
deal with one another on a Sunday morning? As always, opinions differed. On Sunday, October 28th, members of the Section visited a C&S facility in North Hatfield, MA to test our hypotheses.

After coffee, our first step was to understand how the company has changed in the last two decades. The short answer: dramatically. In 1988, C&S had annual sales of $650 million and one major facility. By 2006, annual sales had grown almost 30-fold to $19 billion, making C&S the 7th largest privately held company (by revenue) in the U.S. Instead of one facility in Vermont, there are over 50 facilities scattered over the U.S. The company’s core strategy, however, has not changed that much. In a competitive industry with comparatively low margins, C&S remains focused on gaining scale in wholesale and distribution rather than moving into retail operations. Self-managed teams still do much of the heavy lifting in large warehouses.

While touring the North Hatfield warehouse, we noted some interesting juxtapositions: the space was cavernous yet tightly managed, workers relied both on brawn and voice-recognition software, bananas harvested in a tropical environment were matured in an ethylene gas-infused cold room. Students remained quite engaged despite being refrigerated alongside 12,000 SKUs. Roger Huffstetler (NF) particularly enjoyed “the interaction we had with the folks in the warehouse. The young man who led our tour was full of practical and insightful comments regarding how and why the warehouse was organized.”

The most interesting part was the management’s attitude toward their operations. While proud of past growth and financial performance, the staff constantly stressed how many opportunities there were for further improvement. They hold a strong belief that many “low-hanging fruit” abound and eagerly await analytical and managerial talent to devise and implement solutions.* Given the scale of the company, even incremental improvements would yield significant financial impacts.

Beyond the traditional wholesale distribution model, C&S has made a major investment in ES3, a company that features a just-in-time, fully automated distribution facility of 2.5 million square feet. As a supply-chain services firm, ES3 provides manufacturers with an economical alternative to managing their own distribution centers.

*Contact Matt MacDonald mmacdona@cswg.com for information on career opportunities at C&S.

December 3, 2007
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