I would like to share a logistics horror story that is the epitome of a project planning epic fail. I will call this company Kitchen Sink for the time being. So Kitchen Sink is a reputable company with an annual revenue of seven hundred million, and employs over 45,000 people. At the beginning of Q1 of 2014, they decided to consolidate their Rancho Cucamonga CA and Atlanta GA distribution facilities. The goal was to have all freight routed out of Atlanta GA by the beginning of Q3. A task force of high-level managers was put together to implement the project. On July 1, the project was right on schedule. The entire inventory from the Rancho Cucamonga facility was loaded onto 90 trailers to arrive in Atlanta a weeks time. Seeing that their work was done the project manager proceeded to close down the California warehouse and layoff 30 employees. Anticipating that the project would continue to move smoothly, the logistics team placed orders for six cargo barges from India to also deliver freight in Atlanta by mid-July.
The problem was that although the Atlanta facility was enormous, the project manager did not anticipate how much space would be needed for all of the incoming freight. In short, Kitchen Sink’s Atlanta distribution center had to reject all 90 trailers and send them back to Rancho Cucamonga because there was not enough room for all of the cargo. Since everyone had already been laid off in the California distribution center there was no one to unload the rejected containers. So the containers sat fully loaded in the yard. Also the six cargo barges could not be unloaded either. They too sat fully loaded and waiting on the docks. In the meantime, there was a port strike. No containers could be unloaded until the Longshoremen came to an agreement about wages and benefits. At $60,000 a day for the cargo barges and $9000 a day for the sitting trailers, this was a very costly oversight by the project manager.
I believe that this problem happened because the decision to consolidate the warehouses was made from top-level managers without seeking the input of other crucial parties involved. They were so concerned with making the deadline that they did not do a proper risk management assessment. The strike on July 18th was public knowledge weeks ahead of time and the project manager should have mitigated this possibility. Also the warehouse staff in Rancho Cucamonga was prematurely let go without consideration that they may be needed to further help with the transition.
What could have prevented the project manager from not knowing that there would not have been enough space for the warehouse consolidation? Could this have been prevented if the project manager had made an effort to work with the lower level warehouse employees in Atlanta?