It Could Happen to You

Albertsons had three in-plants, all models of efficiency and cost savings. One of them had been operating for 30 years. In the blink of an eye everything changed.

When Curtis Stoddard interviewed with the manager of the Print Shop at Boise, Idaho-based Albertsons, little did he know the saga he was about to embark upon.

It was the summer of 1977. Stoddard was a long-haul truck driver for the company, and he and his co-workers had just been informed that the long-haul division was being outsourced to contract haulers.

Not wanting to relocate, and being a little tired of the driving business, Stoddard called on a posted opening for an apprentice in the in-plant. He was hired and began to learn the in-house print world.

Soon thereafter, the print shop expanded and began inventorying and fulfilling many of the printed items for store ordering. It became Printing and Supply, and Stoddard was promoted to lead bindery operator.

In 1979, he and the other supervisory employees assisted the manager in designing a whole new Printing and Supply building, which was "sold" to upper management as being a good investment since the company was in a growth phase.

Stoddard progressed from the bindery lead to supervisor of the label-printing department, and in 1981 he moved to the supply side of the operation as supervisor. In 1988, he became the assistant manager of the entire facility, and when his mentor retired in 1995, Stoddard was promoted to replace him.

Facility Remodeled

In 1997, Stoddard planned and won approval for a remodeling of the facility. This added much-needed floor space, equipment and a digital/graphic prepress area, using Macintosh computers to replace the old Compugraphic typesetters. In 2000, he upgraded the digital printer/copier area and modernized the workflow. The in-plant was on a roll.

The year before, however, Albertsons had merged with another industry giant, American Stores, more than doubling its size. Stoddard was made an integration project manager, tasked with implementing best practice solutions to the new company's printing and supply needs. In 2000 and 2001, he was busy figuring out all the ways that the American Stores five chains accomplished this, and comparing it to the legacy Albertsons methods.

Satellite Operations Opened

His efforts resulted in the opening of two sister operations, one in southern California and one in the Chicago area. The three plants were situated to be close to major administrative areas of the company, and where there were high concentrations of stores. They were located next to distribution centers to utilize company transportation for delivery of products to company units at low cost.

After training his counterparts in the other two operations, Stoddard returned to his position in the Boise shop. While he wasn't officially responsible for their running, he was the "guru"—the "go-to" guy for those shops; people in the company looked to him to ensure that the three plants operated in sync. He centralized procurement for them in his own building, and did the same for accounting for two of them.

In 2002, the plants were changed from profit centers to break-even operation. While unsettling, it had the effect of lowering product costs to the stores, which made the shops more competitive with outside print costs, and brought some "maverick" buyers of print into the fold. Stoddard's Boise shop did $40 million in total revenue one of those years, and regularly topped $20 million, with great operating numbers. Things were growing and looking better than ever.

End of an Era

In 2003, the rug was pulled. Albertsons, under new management from the CEO down, announced huge cost-cutting targets. Executives were brought in from outside of the grocery industry to try to right what was perceived as a listing ship. Albertsons, big as the Titanic after the American Stores merger, was headed for some icebergs, and the company was throwing itself against the wheel to change direction in time.

Outside executives, though, put the in-plant at a disadvantage. First, they had no warm, fuzzy impressions of what the print shop had done for the company for years, because they weren't there. Second, they often viewed with disdain any legacy process, simply because they'd been brought there to fix a company gone wrong—so it followed that everything from the "old" company probably needed fixing. Third, many of them came from industries where in-plant printing just wasn't that big of a deal.

Because outsourcing is one mantra invoked by outsiders brought in to turn companies around, the executives hired consultants to look for outsourcing opportunities in all areas of the company. A firm called A.T. Kearney from Chicago looked at the print shops and took its findings to higher-ups whom Stoddard had never met, and who had never even been in his shops. He was not allowed to view or challenge the reports.

Not a 'Core Competency'

In late 2003, he was told that the printing operations looked like they were financially viable and added value to the products and services they contributed to, but nonetheless, they were not "core competency" processes. It was announced that all three would close, and that their operations would be outsourced so that company resources could be concentrated on "core business" concerns.

That was it. No appeal. Stoddard was assigned to oversee the closures, the disposition of assets, layoffs and to strike outsourcing deals. Of course, few others could conceive of the complexity of that last part, because Stoddard had spent 27 years helping develop and nurture the niche that his shop had carved. It had existed primarily because no one on the outside could do it as efficiently or as cheaply as he could. Once those tasks were completed, he was told, there was a possibility that he would be terminated, as well.

In-plant Did Everything Right

What could the in-plant have done differently to change this result? Stoddard has pondered this endlessly, and always gets the same answer: nothing. The print shops were well-publicized within the company, their systems and customer-centric business methods assured that many complex, important projects got done on time and under budget, they were problem-solvers, their biggest customers wrote letters of support—and still the in-plant's fate got taken out of their hands. Decision-makers moved in quickly with one purpose in mind: clear out the old and outsource.

Faced with this new reality, Stoddard quickly assessed the situation. He considered an employee buyout of the operation and contracting services back to the company. He was told that the chances of that succeeding were slim to none.

He pleaded that although printing may not be core, the supply business was really a mini-distribution center, and utilized so much of the company's internal resources that no one else would be competitive. That spurred a new study of the supply piece of the combined operations, and his argument won out; supply would stay. But sadly, in June of 2004, three growing and bustling print shops were closed.

Print Buying Group Formed

Stoddard convinced management that the outsourcing of the myriad print projects he'd overseen for so long would not be easy or cheap. He told them that a group of company personnel—with knowledge of both Albertsons and printing—needed to be formed to manage the outsourcing processes. They listened, and in July of 2004, he and three of his associates from the Boise shop were hired as the nucleus of that group.

The struggles of finding printers to not only handle the work, but to meet the mandate of saving cost (over what he'd spent decades finding ways to lower in the in-house shops) have been immense. But through the support of their new executive, who understands much of the uniqueness of sourcing print over buying frozen shrimp or soup or tractor-trailers, the group is slowly clawing out some successes.

It's an understood fact that much of what they buy will flat out cost more than what it cost to produce in-house, so the opportunities for big wins come mainly in the projects that weren't printed inside before, nor were they managed by the print shops, and thus were often overspent. So far, those opportunities have been large enough to make the group's efforts look positive.

Still, Stoddard knows that the rainbow has an end, and no pot of gold is there. Through no fault of its own, despite stellar reviews by management and peers for years, despite one of the strongest P&Ls in their company and a reputation for quality and responsiveness, the Albertsons print shops were victims of forces they couldn't influence.