Chapter 4 - Organizational and Managerial issues in Logistics CASE CASE 4.1 Red Spot Markets Company The Red Spot Markets Company operates a chain redesigned to accommodate pallet loading. Fosdick was of grocery stores in New England. It has a grocery surprised that Jason had requested his reassignment to a distribution center in Providence, Rhode Island, from slot that did not involve an upward promotion. That was which deliveries are made to stores as far north as Lowell, his first question to Easter after Easter asked whether he Massachusetts, as far west as Waterbury, Connecticut, was interested in the Providence assignment and as far northwest as Springfield, Massachusetts. No "I'm sorry you started with that question," said stores are located beyond the two northernmost points Easter to Fosdick. "Now we'll have to talk about the in Massachusetts. Stores to the west are supplied by a troublesome aspects of the assignment first, rather than grocery warehouse located in Newburgh, New York. The the positive ones. To be frank, Fred, one of the union Providence grocery distribution center supplies 42 Red employees there made so much trouble for Jason, he Spot retail stores. couldn't stand it." Robert Easter, Red Spot's distribution manager "Who's the troublemaker?" asked Fosdick. is responsible for operations at the Newburgh and Tom Bigelow, was Easter's answer Providence distribution centers. By industry standards, Fosdick remembered Bigelow from the times he both centers were fairly efficient. However, of the bad been at the Providence center. Thomas D. Bigelow two, the Providence center lagged in two important was nicknamed T.D. since his days as a local Providence areas of control worker productivity and shrinkage. high school football star. Fosdick recalled that during Warehouse equipment and work rules were the same work breaks on the loading dock Bigelow and some of for both the Newburgh and Providence centers, yet the the other workers would toss around melons as though throughput per worker hour was 4 percent higher for the they were footbally. Only once did they drop a melon. Newburgh facility. Shrinkage, expressed as a percentage Fosdick recalled hearing the story that Bigelow had of the wholesale value of goods handled annually, was received several offers of athletic scholarships when he 3.6 percent for the Newburgh center and 5.9 percent for graduated from high school. His best offer was from the Providence center Jarvis Jason had been manager of a southern school and he accepted it. Despite the fact the Providence distribution center for the past three years that the college provided a special tutor for each class. and at great effort, managed to narrow the gap between Bigelow flunked out at the end of his first semester and the performance rankings of the two Red Spot facilities. came back to Providence, where he got a job in the Red Last week he requested an immediate reassignment, Spot Warehouse and Easter arranged for him to become the marketing In the warehouse, Bigelow was a natural leader. manager for the Boston area, which would involve He would have been a supervisor except for his inability supervising the operations of 11 Red Spot markets. The to count and his spotty attendance record on Monday transfer involved no increase in pay mornings. On Mondays, the day that the warehouse Easter needed a new manager for the Providence was the busiest because it had to replenish the stores distribution center, and he picked Fred Fosdick for the weekend sales, Bigelow was groggy, tired, and irritable, task. Fosdick graduated from a lesser Ivy League college, On Mondays, he would sometimes hide by loading a where he majored in business with a concentration forklift with three pallets, backing into any empty bay in logistics. He had been with Red Spot for two years and lowering the pallets in position (which had the lift and had rearranged the entire delivery route structure truck from view), and he would fall asleep. The rest of the so that two fewer trucks were needed. As part of this week Bigelow was happy enthusiastic, and hardworking, assignment, he also converted the entire system to one Indeed, it was he who set the pace of work in the of unit loads, which meant everything loaded on or warehouse. When he felt good things hummed when he unloaded from a Red Spot truck was on a pallet. Fosdick was not feeling well or was absent, work dragged. was familiar with the operations of both the Providence "What did Bigelow do to Jason?" Fosdick asked and Newburgh centers. He has been in each facility at Easter least 50 different times. In addition, he spent two weeks "Well, as I understand it." responded Easter, about at the Providence center when the loading docks were two weeks ago Jason decided that he had had it with 72 Part Overview of Logistics Bigelow and so he suspended him on a Monday morning moving slowly. The first echelon of outgoing trucks, after Bigelow showed up late, still badly hung over. It was which should have been on the road, was still there. nearly noon, and he told Bigelow to stay off the premises Another 20 of our trucks were waiting to be loaded. and to file a grievance with his union shop steward. On the other end of the building, you could see a long He also told Bigelow that he had been documenting line of arriving trucks waiting to be unloaded, usually Bigelow's Monday performance-or nonperformance there was no line at all. I knew that our suppliers would for the past six months and that Red Spot had grounds start complaining because we had established scheduled enough to fire Bigelow if it so chose. He told Bigelow unloading times. However, I decided not to ask Jason to go home, sober up, and come back on Tuesday when whether he had begun receiving phone calls from them." they would discuss the length of his suspension, Bigelow "Inside the center, the slowdown was in effect. walked through the distribution center on his way out. Lift truck operators who usually zipped by each other and I'm sure Jason felt he had control of the matter." would now stop, turn off their engines, dismount, and "However." continued Easter. "by about one carefully walk around each other's trucks to ensure there odlock. Jason realized he had a work slowdown on his was proper clearance. Satisfied of this, they would then hands. Pallet loads of bottled goods were being dropped, mount, start their engines, and spend an inordinate two forklifts collided, and one lift truck pulled over amount of time motioning to each other to pass. This the corner of a tubular steel rack. At 4:00 PM. quitting was only one example. When we got to Jason's office, he time, there were still three trucks to be loaded: usually had a message to phone Ed Meyers, our local attorney they would have departed by 3:30. Rather than pay in Providence, who handles much of our labor relations overtime, Jason let the workforce go home, and he and work there. He called Meyers and was upset by the the supervisor loaded the last three trucks discussion. After he hung up, he told me that Meyers had "On Tuesday, Bigelow did not show up, and the been served papers by the unionis attorney, charging that slowdown got worse. In addition, retail stores were Wednesday's firing of Bigelow was unjustified, mainly phoning with complaints about all the errors in their because no provable grounds existed that Bigelow was orders. To top it off, at the Roxbury store, when the behind the slowdown. Meyers was angry because, in trailer door was opened the trailer contained nothing firing Bigelow on Wednesday, Jason may have also but empty pallets. Tuesday night somebody turned off blown the suspension of Bigelow on Monday, Jason the switches on the battery chargers for all the lift trucks, and I started talking, even arguing. I talked so much so on Wednesday, the lift-truck batteries were dying all that my cigar went out." said Easter. so I asked Jason, day, I got involved because of all the complaints from the who was sitting behind his desk. for a match. He didn't stores. On Wednesday, Jason got my permission to pay carry matches but looked inside his center desk drawer overtime, and the last outgoing truck did not leave until for one. He gasped, and I didn't know what was the mat- 7:00 PM. In addition we had to pay overtime at some of ter. He got up, looking sick, and walked away from his our retail stores because the workers there were waiting desk. He said that a dead rat had been left in his desk for the trucks to arrive. While I was talking to Jason that drawer, and he wanted a transfer. He was in bad shape afternoon, he indicated that he had fired Bigelow." and the distribution center was in bad shape, so I had the Easter lit his cigar and continued. "On Wednesday opening in the Boston area and I let him have it. Actually, I decided to go to Providence myself, mainly to talk to right now he and his family are vacationing somewhere Jason and to determine whether we should dose down in Eastern Canada. He needs the rest." the Providence center and try to serve all our stores Fosdick was beginning to feel sorry that he knew out of Newburgh. This would have been expensive, but all the details, but he persisted. "Then what?" he asked Providence was becoming too unreliable. In addition, Easter we had a big weekend coming up. When I showed up "Well, I took over running the distribution center in Providence, Jason and I had breakfast together in my I phoned Meyers again, and he and I had lunch. He hotel room Thursday morning, and he told me pretty thought that Jason had blown the case against Bigelow much the same thing I've been telling you. He said he and that we should take him back. So on Friday, Meyers, knew Bigelow was behind all the disruption and that Bigelow, the union attorney, the shop steward, Bigelow's today, Thursday, would be crucial. I've never seen Jason supervisor, and I met. Jason, of course, was not there. It looking so nervous. Then we drove to the distribution was a pleasant meeting. Everything got blamed on poor center. Even from a distance, I could tell things were Jason. I did tell Bigelow that we would be documenting Chapter 4 - Organizational and Managerial issues in togitics 73 his performance and wanted him to know that Jason's It was lunchtime. Fosdick decided to walk to successo, meaning you, was under my instructions to a small caf where he had eaten at other times. It was tolerate no nonsense. Bigelow was so pleasant that day two blocks from the distribution center and on the that I could not imagine him in the role of a troublemaker side away from the office. So he walked through the The amazing thing was that when he went out into the center, which was quiet since it was closed down for center to resume work, a loud cheer went up and all lunch. He walked by the employees' lunchroom and the drivers started blowing their lift-truck horns. For a heard the normal sounds of 50 people eating and talk moment, I was afraid all the batteries would run down ing. Just outside the lunchroom was one lift truck with again. But I was wrong. They were plain happy to see an empty wooden pallet on it. As Fosdick watched, one Bigelow back. You know, the slowdown was still in effect of the stock clerks came out of the lunchroom with when Bigelow walked onto the floor. I'd say it was 10:00 an opened case of sweet pickles from which three jars A.M. and they were an hour behind. Well, let me tell you had been taken. Next came another stock clerk with an what happened. They went to work! By noon we were opened carton of mustard from which two bottles had back on schedule and by the end of the shift we were a been removed. One of the derks suddenly saw Fosdick half-hour ahead of schedule. In fact, the last half-hour and said weakly. "We take these opened cases to the was spent straightening up many of the bins that had been damaged merchandise room." Fosdick went into the deliberately disarranged during the slowdown. I tell you, lunchroom. There on the center table were cases of cold Tom Bigelow does set the work pace in that warehouse!" meat, cheese, soft drinks, mayonnaise, and bread. All "So what do you suggest I do at the centert" asked had been opened and partially emptied to provide the Fosdick. workers' lunches "Well, the key is getting along with Bigelow. Talk Bigelow was making himself a large sandwich when to Meyers about the kind of records you should keep he saw Fosdick approach. Don't get uptight," he said to in case you decide to move against Bigelow. Be sure to Fosdick. "You've just come across one of the noncontract consult with Meyers before you do anything irreversible fringe benefits of working at the Red Spot Providence Frankly, I don't know whether Bigelow will be a problem distribution center. May I make you a sandwich?" We never had trouble with him that I knew about before Jason was there. According to Bigelow and the union Questions attorney, Jason had it in for Bigelow. If I were you, I take it easy with Bigelow and other labor problems See what 1. How should Fordick respond to the immediate situation you can do instead about the inventory shrinkage 2. What controls, of the types discussed in this chapter, might On the next Monday morning. Fosdick showed have been used by Red Spot Markets to reduce or eliminate the problems discussed in the case up at the Providence distribution center. After gingerly looking in all his desk drawers, he had a brief meeting 3. What longer range Meps should Fordicktake to control the operations of the Providence distribution center! with his supervisors and then walked out to meet the 4. What longer-range steps should Fosdick take to improve entire workforce on a one-to-one basis. Many remem the Providence distribution center's productivity bered Fosdick from his earlier visits to the facility, 5. What longer-range steps can Foulick take to reduce the Because it was a Monday morning, he had not expected distribution center's high rate of shrinkage? to encounter Bigelow, who was present. dear-eyed, alert, & Assume that Fosdick decides that the practice of free and enthusiastic. Bigelow was happy to see Fosdick and lunches from the opened cases of goods must be stopped shook his hand warmly. Bigelow then excused himself Develop and present the arguments he should give in a saying he had to return to work. The truck dispatcher meeting with the union shopward said that the workforce was ahead of schedule again: It 7. This is a continuation of Question 6.) Assume, instead, that was 11:00 AM, and they were about 15 minutes ahead. you are the union shop steward. Develop and present your Fosdick returned to his office, and there was a phone argument that the free lunches represent a long-standing employee benefit enjoyed by the distribution centers message from Ed Meyers. Meyers asked to postpone employees and that management attempt to stop them in a their luncheon for that day until Tuesday noon. Then breach of an unwritten contract and will be resisted. Robert Easter called to ask how things were going on & Much of the situation described in the case seems to evolve Fosdick's first day. Easter was pleased that things were around the personality of D. Bigelow. How should be be going smoothly treated? Why