Are problems are actually best summed from for a Harvard Business Review case study from the late 80s.
I cannot find a free link on the net, so I’ll summarize.
It was about Vlasic Foods. Makers of Vlasic Pickles.
And about growth.
Vlasic, like most good companies wanted to grow. Provide a product and be profitable.
One day, they entered a supply agreement with WalMart (If I remember correctly).
As is Walmart’s typical practice, they pushed vlasic on the price. In fact, they pushed to the point that Vlasic was providing a giant jar of pickles (gallon I think) for a retail sale price of $3 (I think)
So along came the problems. Vlasic wasn’t geared to providing gallon jars of pickles by bazillion.
Vlasic supply chain wasn’t geared to providing pickles by the bazillion gallon either.
Walmart customers loved the cheap gallon super deal. Bought them by the droves. In fact, it was considered something that pulled customers into the store. You could only get the gallon vlasic at the stores.
Vlasic was bursting the seems and going broke. Their margins were thinner then ever, less per jar than the original jars but they were pumping out massively more product. Massively more labor. Massively more distribution costs, processing cost, etc. And the pain rolled down through the supply chain.
Then Vlasic figured something out. The customer’s loved the gallon jar. But didn’t eat more pickles. The pickles literally rotted in the fridge.
But the customers still wanted the pickles and stores still wanted the big jars…
So we have Vlasic, Walmart, the suppliers and consumers. Who is driving the situation and for what?
Similarly, we have Government, Public Employee Unions, Tax Payers and service consumers (both the public and developers).
