Complex Systems Management Case Study
Re-engineering Fulfillment Operations at MicroWarehouse, Inc.
This document describes work performed at MicroWarehouse, Inc., in 2001 / 2002. During this period the corporation’s Fulfillment operations were re-engineered. This effort entailed a complete review of the Marketing, Sales, Finance, Warehouse, and Customer Care operations across an organization which is characterized by the following attributes:
- A $1.2 Billion corporation, consisting of 3200 employees on three continents (multiple sites in America, centralized in Canada and the United Kingdom)
- Old, disadvantaged technology (HP3000 mainframe) whose support was being discontinued
- Thousands of Stock Keeping Units [SKU’s], which needed Just In Time procurement and delivery
- A broken order-taking and fulfillment process flow whose complexity was unknown because it had never been documented across the corporation
- Long-term employees who, while competent in their own domains, had erected fiefdom barriers over time; the organization was ill-equipped to operate efficiently or collaboratively
- A market situation where inability to compete on a cost-effective basis was generating significant competitive pressure by rivals
The tactics and tools, although simple in nature, were crucial to success. The central mantra of our collective work was “Everyone must have skin in the game.” In order to ensure that we developed collective buy-in, tools included:
- Stakeholder Analysis
- Identification and co-opting of Subject Matter Experts and Key Decision Makers
- Use of “test cases” (actually, Use Cases) to define the as-is and to-be processes
- Analysis of technology gaps and potential enablers
- Implementation of a collective set of ethics: “listen-verify-act-hold accountable” 
Bottom line? During the process of re-engineering the corporation, we:
- Designed and developed new process flows for the entire corporation (Sales, Marketing, Finance, HR, IT, Warehouse Operations, Customer Care)
- Designed and developed new job classifications and responsibilities to reflect the “to-be” environment
- Became aware of an opportunity to save $27.8 M a year; we modified the budget (with the Board’s approval), increasing it from $2.6M to $5.3M to reflect increased need for bandwidth and storage / retrieval hardware.
- The re-engineering effort paid for itself within 14 months
 Teams were held strictly accountable to the following when designing requirements: “If you can’t develop a Test Case for this process, then it’s not a Requirement… it’s merely an ill-formed Desire.”
Other mantras: “We hate meetings. If we’re not ready to engage each other effectively then a motion to adjourn is in order”, and “If you show up late or miss a meeting, YOU get the action items.” It’s amazing how efficient our meetings became over time. Also, as a byproduct, team “norming” established collective expectations that kept non-compliant behaviors in check. Peer pressure can be a wonderful thing.