Working Smart

Stories in this section:
The Four P's: Lessons Learned in a Fast-Growing Company
Dietary Supplement Marketing: Rethinking the Use of Third-Party Material
The Right Stuff: Help Your Salesforce Get It

The Four P's: Lessons Learned
in a Fast-Growing Company
by Carol Hukari

I began working for Arbonne International in January 2005, just a little over a month after its purchase by a private equity group. The company was nearly 25 years old and had just recently started experiencing some healthy growth. Little did I know how quickly that growth would snowball and the intense demands that would be put upon the management team.

As SVP Operations, I was in charge of Warehousing and Distribution, Purchasing, and Facilities. The company at the time had about 40 office employees and some 178 employees-working one shift-in the warehouse. Arbonne had moved into its existing 150,000-square-foot facility in August 2004. At that time they moved from a manual picking and packing system to a paperless Pick-To-Light (PTL) system, which they were just shaking out. The warehouse, which had only four dock doors, could process an average of 4,500 to 5,000 orders per day (a challenge given our month-end volume, which was much higher), and the company was shipping 90,000 orders per month.

Our 2005 sales grew 165 percent over the prior year, a rate that would challenge any company-and one that was especially challenging for a company with a weak infrastructure. We started the journey missing entire departments: Human Resources, Legal, International, Regulatory, Customs Compliance, Demand Planning and Quality. Many of our departments-especially Finance, Distribution, I.T. and Purchasing-were woefully understaffed. In fact our Purchasing Department consisted of one individual who spent the bulk of his time writing purchase orders manually.

By the end of 2005 we had 312 office employees, the warehouse had about 450 employees working two shifts, and the company was shipping 300,000 orders per month. In addition, we had built a two-tier automated picking and packing system at our main facility; we located and set up operations in an additional 90,000-square-foot warehouse to hold inventory; we were completing the first phase of our corporate office remodel; and we were beginning construction of a new 208,000-square-foot distribution center just outside Indianapolis.

Today we can look back with pride at how far we've come-even while we continue to build and improve our operations throughout the company. During the past 18 months, my team and I have learned some key lessons that fall into what I like to call the "Four P's": Planning, Processes, People, and Partners. You don't have to be growing at hyper-speed like Arbonne to put these lessons into action, and you don't have to suffer the pain of doing it wrong (take a few tips from me instead).

Planning

No one likes to plan. Because none of us has a crystal ball, plans get outdated as soon as they're made. But plans can give you a general direction and help you stay out of hot water.

In small and fast-growing environments, the issue is usually lack of data. You may have archaic systems-or multiple systems that don't talk to each other. The data may be difficult to find. or never tracked.

If you find yourself in this position, there's no need to despair. First, find yourself a strong analytical person who can understand the dynamics of your business. Our VP Finance was invaluable as we struggled to tie the data together to help us make projections for the future. Without his help, we would never have known in early March that we needed a second shift in the warehouse by the time we got to April. And we would never have known in June that we had to build a second picking and packing line to get through August. And without our outside contractor, we would never have known that we would run out of room to store our inventory in August just when we were scheduled to bring in more inventory for the holiday season.

If you don't have the data, start immediately to build it. Figure out the information you need and begin tracking it-manually, if necessary. After all, it's worth bringing in an extra temp or two to keep the manual logs if the information you gain can keep you out of trouble. Most importantly, review the data constantly so you can keep on top of changes before the situation becomes critical.

Processes

Small-business owners tend to grow their businesses organically. They learn what works and they do it. When someone new joins the organization, they may or may not pass that knowledge on. If they do, the process may get over-layered with a new process that only the new person knows.

Subsequently, all the knowledge about how the company ticks resides in the brains of a few individuals, and those individuals become indispensable to the company. That's great for individual job security but not particularly great for the growth of the company. You see it all the time in business: the founder dies and the company becomes rudderless. Or a key individual becomes ill and no one knows what to do as the next step and, as a result, many missteps are made.

In today's fast-paced society, it's critical for you to ensure that you document and train your key processes. "But wait," you say, "I have enough trouble getting the work done on a day-to-day basis. How can I possibly take time to write down our processes, much less train people on them?"

My question is: Can you afford a 200,000-order backlog when you can only ship 10,000 orders a day? That's exactly the situation we had to deal with when we turned on a new computer system, and every process in the warehouse had as many different versions as we had people.

The answer is easy, but not free. Bring in outside consultants to document those processes for you. Be sure they keep it simple. Over-complication can lead to confusion and bog you down. Everyone needs to know what to do and when to do it.

Put the processes in writing, and then bring in a professional trainer to ensure that everyone on the team is on the same page. And don't forget to put in controls and measurements to ensure that everyone is accountable. If you start this early, you can help avoid some growing pains later.

People

The biggest lessons I learned have to do with people-not surprisingly, since people are the mainstay of any business. Here are four quick lessons I learned the hard way:

1. Hold Out for the Right People. The tendency when you are growing fast is to settle for a warm body so you have someone to do the work. The truth is that the wrong person can create more mistakes and take a long time to remove. When in doubt, don't hire the candidate.
   
   
2. Cultural Fit Is Critical. Not everyone can fit into every type of environment. I hired a bright and talented employee who came to us with a great background in a multibillion-dollar company. In that environment, this employee followed established processes, had data readily available and delegated tasks to a variety of people. In our environment, this person was a "fish out of water" and simply could not work in a fast-paced environment that required flexibility, communication and the willingness to roll up your sleeves and do the work yourself. The lesson is that no matter how brilliant or knowledgeable someone is, you have to fit the personality, the attitude and the skills to your environment.
   
   
3. Don't Wait Too Long to Make the Tough Decisions. Our CFO is famous around our building for saying that fast-growing companies are just like turnarounds-you have to make people decisions and make them fast. Otherwise, the consequences can costs thousands, if not millions, of dollars.
   
   For many of us, this is one of the most difficult challenges we face. I love to mentor people and help them succeed. But in a fast-moving environment, you just don't have the luxury. Figure out what skills are needed, evaluate whether the existing people have them, and if they don't, you have no choice but to replace them.
   
   
4. Hire From the Top Down. In building a department, I kept the line workers in place and looked to hire the next level of management above them. It's not a quick way to grow a business, and it can put a tremendous strain on you while you try to keep a multitude of middle-level managers on track and accountable.
   
   A much more efficient way to manage the growth is to hire from the top down. Put a VP or director in charge. They'll be more likely to help set strategic direction while being in a position to roll up their sleeves and pay attention to the details of building structure and accountability below them.

Partners

When you are growing at lightning speed, there is no way you'll have the knowledge or skills to do everything yourself. That's where your partners come in. Whether they're consultants, vendors or acquaintances you've met through networking, partners are invaluable in lending a helping hand.

In April 2005 I attended a DSA Company in Focus seminar. While waiting to tour another company's distribution facility, I struck up a conversation with another attendee. He assured me that his company could "cut our warehouse staff in half." It sounded like an outrageous claim at the time, but I committed to a follow-up visit. That one appointment led to a fabulous relationship with a company that made a major contribution to many of our accomplishments over the past 18 months.

If you haven't learned about the power of networking yet (shame on you-you're in the networking business!), it's never too late to start building relationships that can cement your future success.

One thing I've learned during my 17 years in direct selling is that the people in this industry know that what you give away comes back many-fold. Prior to joining Arbonne, I was COO of a start-up nutritional company in this industry. It totally amazed me that I could call up the president or CEO of a "competitive" venture and get straightforward, valuable advice. It happened over and over again. The cooperation and friendship I've experienced makes me very proud of my direct selling colleagues. So the next time someone reaches out to you, cultivate the relationship. You never know where it will take you.

Carol Hukari is currently SVP Operations of Arbonne International in Irvine Calif. Prior to joining Arbonne, Carol served as COO of a start-up, direct selling subsidiary of Natrol Inc. She also spent 12 years at Shaklee in a variety of management positions, including VP Marketing, SVP Customer Operations, and SVP International.