CASE STUDY – Specialty Product Distributor (CONFIDENTIAL)

OVERVIEW

A PE-backed dry commodities distributor in Southern Ontario was on a three-year timeline to double volumes from $75M and prepare for exit. But its systems and site were stuck in a past century — and collapse was already underway.

Trigger for Intervention: Inventory losses, transport waste, and systemic gaps signaled that scaling the current facility was not just risky without operational control systems — it was reckless.

THE CHALLENGE

Legacy systems, transport waste, and poor governance were all silently dragging performance toward failure.

• Inventory losses topped $1M/year. Missing product, special orders gone stale, poor FIFO and expiry tracking, and no robust stock count procedures undermined monthly profitability.
• Transport inefficiency cost $600K/year. Bloated fleet, ad hoc runs, and duplicated efforts drained cash. Ingrained suboptimization was endemic and costing.
• $400K CHEP penalty. Blue pallet management was non-existent due to no ownership; losses went untracked until a pallet audit charge hit.
• No usable data, no operational systems. Old school hand routing, no WMS or TMS, and reliance on untracked manual pick notes crippled any scaling potential.
• PE due diligence missed core fundamentals. Financials looked fine, but there was no operational backbone to scale from.

THE APPROACH

Gary Newbury’s brief evolved from discovery to transformation partner, covering five mission-critical areas for recovery and growth.

• Transport and routing structure. Flagged that the existing site had too few working dock doors and lacked live systems. Proposed detailed marshalling area layout and routing logic with same-day capability as a competitive differentiator.
• Capacity modelling and site planning. Built item-level forecasts using historical finance system data. Modelled three scenarios showing the legacy site would collapse in 6 months without recommended civil upgrades, or in 18 months even with them.
• New facility layout design and stock zoning. Designed a racked and block-stack layout optimised for velocity, with reserve/pick face logic and expiry management embedded.
• Inventory and transfer discipline. Created a pallet-level tracking model and movement protocols to control the warehouse-to-warehouse transition to drive product ID and eliminate “strays.” Provided guidance on SKU rationalisation and applied strict shelf-life controls.
• Leadership structure and governance. Designed new ops organisation to facilitate exiting an old school ops manager. Developed processes and timetable to support remote routing. Initiated daily meetings to avoid delays, misunderstandings, and recency bias in preparation for the transition.

THE SOLUTION

A robust warehouse transition strategy and support framework were ready to go — until leadership changed course.

• Sequence failure at go-live. Stock arrived at the new site in random order, not per transfer plan, causing chaos, errors, and inefficiencies.
• Transfers were botched. Early truck arrivals, missing labels, and no adherence to protocols created processing delays.
• Tracking system was ditched. Abandoned by the team on Day 2 of transition without notification or providing any alternative to achieve food certification compliance.
• Critical block stack zones unavailable. Bulk storage was half what was planned to be available, choking reserves, leading to misplacement and future picking challenges.
• Inbound buried outbound. Receiving continued at a significant pace while outbound routing logic was poorly applied; the transitioned operation teetered on meltdown.