CASE: GS-34 DATE: 04/07/05
WEST MARINE: DRIVING GROWTH THROUGH SHIPSHAPE SUPPLY CHAIN MANAGEMENT Our goal is to be the best billion dollar boating company every day. —John Edmondson, Chief Executive Officer, West Marine The whole company has culturally undergone a huge shift in terms of recognizing the value of supply chain management to the success of the organization and our ability to grow. —Pat Murphy, Senior Vice President of Logistics, West Marine
It was the evening of January 13, 2003 at West Marine’s Watsonville, California headquarters. In the morning, CEO John Edmondson would announce to West Marine’s shareholders, the press, the boating community, and the employees of the two rival companies that West Marine was acquiring BoatU.S.’s retail stores, Internet/catalog business, and wholesale operations. Although the negotiations had gone on for months, only a small handful of individuals within West Marine had been involved. BoatU.S.’s founder and CEO had insisted on secrecy, and had changed his mind about the sale more than once during the negotiation process. The two companies had been fierce competitors for years. Edmondson, and his counterpart at BoatU.S., knew the announcement would come as a shock to the loyal employees and customers of both organizations. In the spring of 1996, West Marine had acquired another one of its major competitors: E&B Marine. While the mechanics of the acquisition had gone relatively smoothly, the company quickly discovered that its infrastructure was not strong enough to support an organization that had almost doubled in size overnight. West Marine’s supply chain was especially hard hit, with its systems and processes proving inadequate to keep all 72 West Marine and 63 E&B Marine stores amply stocked. The results had been disastrous. Peak season out-of-stock levels climbed to more than 12 percent and, correspondingly, sales dropped by almost 8 percent within the first year following the transaction. Lyn Denend prepared this case under the supervision of Professor Hau Lee as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Copyright © 2005 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved. To order copies or request permission to reproduce materials, e-mail the Case Writing Office at: firstname.lastname@example.org or write: Case Writing Office, Stanford Graduate School of Business, 518 Memorial Way, Stanford University, Stanford, CA 94305-5015. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means –– electronic, mechanical, photocopying, recording, or otherwise –– without the permission of the Stanford Graduate School of Business.
West Marine GS-34
Edmondson was brought in after the E&B Marine acquisition to execute a company turnaround. For more than four and a half years, he had been focused on rebuilding West Marine. The company installed a new senior management team, invested in new systems and processes throughout the organization, and initiated a major cultural change. Edmondson and his team were proud of West Marine’s recent achievementsparticularly in the supply chain arena. Yet, on the eve of the company’s latest acquisition, he wondered whether they had done enough to effectively support another 62 BoatU.S. stores without experiencing the negative repercussions of the E&B Marine acquisition. Edmondson took a deep breathsavoring the “calm before the storm.” West Marine’s course had been set. Now he only needed to launch the journey and hope for smooth sailing. SETTING SAIL: COMPANY BACKGROUND Anchors Aweigh Randy Repass founded West Marine in 1968. Repass worked briefly as a computer engineer in Silicon Valley, but found the high technology industry to be rather cold and impersonal. An avid boater, he sought refuge in his hobby and began selling nylon rope...
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