A meltdown in the ABC's warehouse is crippling restaurants, casinos, and liquor stores throughout Mississippi after the warehouse installed a new software system and removed the conveyor belts. Siemens, anyone?
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| Sam's Club Liquor Store in Madison last week |
The ABC's warehouse had a staffing shortage due to low pay. The legislature authorized ABC to hire a private contractor to manage the Gluckstadt warehouse. The Department of Revenue issued solicited bids, and awarded the contract to Ruan Transport of Iowa in March 2023. Ruan beat out three competitors, including two from Mississippi.
Operations ran rather smoothly until Ruan closed the warehouse to take inventory from January 7-12. Taking inventory is a relatively simple process that usually goes off without a hitch. However, Ruan was not just satisfied with counting cases and decided to mess with the simple.
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| Credit: PEER Committee |
The warehouse management software system reached its end of life and would not receive any more updates. Ruan took advantage of the shutdown to install the Blue Yonder software but did so without conducting any Beta tests. Unfortunately for ABC customers, Blue Yonder did not communicate with ABC's software (MARS). Again, shades of the Siemens debacle which had a similar problem. However, Ruan was not through with trying to kill more birds with the same stone.
Ruan removed the old conveyor belt and sorter system. The company could no longer obtain parts and was forced to have a machinist fabricate replacement parts when needed, not exactly a cheap solution.
Instead of installing a new conveyor belt system, Ruan switched to a pallet delivery system where orders are no longer sorted at the warehouse but shrink-wrapped on pallets and placed on trucks. The drivers are thus forced to do the sorting and figure out which customer gets which case. The invoices could provide guidance to the driver as he makes deliveries but the shipments frequently lacked invoices. Murphy, meet the law.
The result was shipping times skyrocketed from 48 hours to 3 1/2 weeks, crippling customers. Shelves became empty at package stores while restaurants struggled to fill their customer's glasses.
Raines Cellars owner Anne Marie Smith sounded the alarm on the disaster at the ABC warehouse last weekend on social media:
The ABC closed the first full week of January to conduct inventory. We (and everyone who has access to TAP) had ample notice to prepare for this. Roughly two months. This led to the original delay in deliveries which should have been manageable.While inventory was happening, the ABC implemented a new computer system per Ruan allegedly knowing there were issues with the system. This new system is still not working properly despite the updates that people are working around the clock on this issue. This led to further delays.During inventory and the system issues, the ABC tore out ALL of the conveyor belts that load our trucks for delivery with no intention of reinstalling. This took daily deliveries from 20,000 to a reported 8,000 which turns out was actually only 4,000 cases a day being delivered. The turn around time greatly decreased.If I had to guess 95% of the people with a liquor permit have no idea this is what is happening due to lack of communication and information. There is no plan and no light at the end of the tunnel.Starting January 14, I along with other liquor stores, brokers, and industry folks started reaching out to the ABC and other distributors to try to get updates and an idea on plans. There is no plan. We started reaching out to legislators. ...My oldest truck is from January 22. If I am lucky, I will receive this ONE MONTH from placing the order.
Our particular store is not near as bad off and a majority of the small LOCAL package stores in Mississippi. There are stores with 25% of their inventory on their shelves. There are stores who are concerned they will close within two months.There are restaurants who are past scrambling with lack of information, obliteration to their wine and spirits program, and angry guests on one of the busiest weekends of the year.I have explained about 2 dozen times this afternoon why we don’t have X product. I see the post from our fellow LOCAL stores and they are struggling the same. The liquor and wine reps are hopeless. The suppliers don’t know what to do. And there is no one in our government run system who is listening or seems to care.The state has cut back on supplier deliveries to try and manage the now over stocked warehouse. Some were asked to cancel trucks through the month of March. This means the already stressed system and out of stocks will go through the roof. This also hints to no solution for an additional month and a half....I have 17 outstanding trucks. Your local store has tens of thousands of dollars of outstanding orders. Just for measure, we have received 7 trucks in the last 6 weeks. We should have received 24.My sales are down. Every single wine and spirits store is suffering from this. This also means the taxes are down. ...
Mrs. Smith said ABC released a statement that said it had people working around the clock and it would take weeks to resolve the issue.
The cluster**** continued as Ruan couldn't even get the forms right. The paperwork no longer states sizes or brands. There is only an item code and the person checking the order in has not idea which cases associate with the code, adding to the confusion.
The combination of software failure, removing the conveyor belts, and abolishing the sorter system at the warehouse meant a perfect storm of incompetence hit ABC customers.
One liquor store owner related how ABC shipped 100 cases to a colleague. Unfortunately for the customer, only 14 cases had the required paperwork. Thus, he could not take delivery of the other 86 cases even as he pointed at his order in the truck. Several package store owners said trucks were carrying undelivered inventory for days, even weeks, at a time as they had no means of linking the case with the customer.
Mrs. Smith said her business is carrying on for now but there are clouds on the not too far horizon. Her store has 65% of its normal inventory and no back stock. She considers herself fortunate as she said s there are stores that have only 25% of normal inventory. The entrepreneur said some corner stores (selling smaller bottles of liquor) told their sales reps they might close in the next two months if deliveries do not improve.
The cascading of problems continues. Suppliers are told to cut deliveries because the warehouse overflows with over 200,000 cases. Brokers are told to cancel all appointments in March. A February 9 email from a Gallo rep to his customers states:
Good afternoon. The ABC has asked suppliers to cut shipments to the state due to the warehouse being overstocked due to them not getting product out in a timely manner. You will start seeing more out of stocks due to this recent change.
"My biggest thing is the conveyor belts. The new warehouse is supposed to open a year from now. The warehouse is now overstocked because it can't get product out so they have asked brokers to cut new shipments," said Mrs. Smith.
A restaurant owner vented his frustration as he said the warehouse is "in complete disarray. He confirmed it is taking 3 1/2 weeks to receive an order and that Douglas Express drivers are forced to waste time sorting product instead of ABC employees at the warehouse. "ABC has passed the buck of organizing deliveries to Douglas," he said before asking "Why couldn't they make any headway when they couldn't deliver to north Mississippi?"
A lobbyist said his casino clients used to receive one shipment per week. They went three weeks without a shipment. They finally received a shipment last week but the order was partially filled. Progress, indeed.
In a scene reminiscent of the great Covid Toilet Paper Scare, panicked ABC customers are now ordering more cases than normal, thus contributing to more delays.
Many customers complain they are fumbling around in the dark since ABC only issued a few updates:
A small group of legislators toured the warehouse last week after receiving numerous complaints from constituents.
The term of Ruan's contract is four years. Ruan has the option to renew the contract for two additional four-year terms.
Kingfish note: How much revenue is this costing the state? If shipments are down 40% or more, how much tax revenue is Mississippi losing?
Just curious. Would the amount of tax revenue lost be enough to pay for a new conveyor belt system?
66 comments:
Should have been privatized years ago.
The answer to your first question is 40% of whatever the sales tax revenue would be and I don't know what conveyor belts cost or what the budget for maintenance and repair is (they should have one) but I'll bet this one is passed along eventually to the consumers. We get to pay for poor business practices so there's not much incentive to get it right other than honor and pride which isn't outweighing money these days.
There’s a story above your comment about how badly privatization has gone. You should read it!
At least ABC didn’t have to pay livable wages to the Mississippians who actually knew how to run the warehouse. Now the system is broken, vital equipment has been removed and will likely need to be replaced, and the state is tied to a contract with an out-of-state company that has to be relied upon to unfork the situation it was too incompetent to handle in the first place.
But at least ABC didn’t have to increase pay for the Mississippians who worked there before.
As an IT person if you do not put in place any form of testing and do not have a back out plan in place where you can restore back to your old systems should there be a problem you should not be doing anything higher than help desk in IT. I wonder who does the ABC's systems and makes those decisions.
Classic government blunders. If you did this in a manufacturing setting everyone involved would be kicked to the curb, maybe even brought to court. I bet they get high (drunk) on their own supply
Damn that sux
I need a drink
Exactly. This just creates more patronage jobs and bureaucracy.
I'm not for abolishing 3 letter agencies, but we gotsta abolish ABC. So ridiculous.
Great hires for the COJ water system-
Why don’t we use a distributor system like beer? How is liquor and wine different? Louisiana drinks a shitton of booze and use distributors. Why are we “smarter”?
Honestly, sell the warehouse and let liquor distributors handle the logistics.
This is why I make my own moonshine and illegally smuggle my italian wine and french champagne to my backyard airstrip like a cocaine cowboy! Down with the department of revenue!
It all seemed like a good idea at the time they decided to do it.
Ooops!
This really isn’t the fault of privatization. It is the fault of the State employees who failed to vet their contractor (likely due to corruption) and went with the lowest bidder who didn’t have a proven track record of performance.
The free market is always the best option and the free market always finds the best solutions.
But the free market doesn’t work when a small number of easily corrupted and incompetent government officials get to choose the “free market” solution without accountability!
This x100. Making everything run through a single point of failure is finally showing the brilliance in that design.
Ditch the warehouse, distributors, and the three tiered system. Bring us into the 21st century with an actually consumer friendly alcoholic beverage market. There is no credible argument for what we currently have. It’s just protectionism for distributors and vestiges of teetotaler ideology.
Chaos typical of top-down Republican state leadership.
Delta Discount...right across the River...
So an incompetent private contractor has made a royal mess of things, including taking the money from ABC but squeezing out employees due to low pay. This is the commercial equivalent to a slum lord who collects rent but won't pay the water bill. This is on ABC, who should terminate the contract immediately.
Great place to get Sazerac Rye and they don't gouge you for it.
ABC should have been abolished years ago. Those who know will know who I am, but when the state switched to the new online tax system they rolled out during the busiest season (November through January). ABC was already a clusterfuck with puddles the size of small lakes in some aisles. I could go home smelling alcohol in my beard.
Classic ‘let it melt’ move straight out the MDOT playbook--install a busted system, gut the conveyors, and watch the whole state drown in incompetence while pretending it’s progress and how hard this must've been for our state employees.
Also an IT guy here. it’s more like they had two choices between Cato and Meraki and despite knowing Cato is worse than Meraki, they still went with Cato.
just another reason why the state should not be in the alcohol business
I can't believe there isn't an out in this contract. Heads should be rolling.
first mistake is handing off a a core process to a private vendor. I have worked in IT project managment for years with the state. Procuring software is one thing but they gave total control of a major business to a private vendor. Also who was the idiot who decided to implement new software in a weeks time without testing. It seems the vendor is stupid and the dept of revenue is more stupid for not providing more oversight to stop the new software from going in. Heads should roll at the dept of revenue.
This entire warehouse fiasco was initiated by the passage of SB 2844 in the 2022 Session.
Which legislated among other things:
*Contracting out existing warehouse and distribution operations.
*Construction of a new warehouse and funding for the same.
*Set the basis for continuing maintenance and operation of the existing warehouse by the new contracted operator while the new warehouse was constructed.
As is sometimes the case there is a PEER report which has some details.
EFFORTS by DOR and Ruan to Track Performance
Although the DOR-Ruan contract established recommended key performance indicators, the contract did not identify performance minimums or establish penalties for non-performance. Since the start of the contract, DOR and Ruan have worked to refine the key performance indicators.
https://share.google/EJB1uBOuOZ8qrgxNe
I have a friend who owns a liquor and wine store. Occasionally visit. On one occasion, I bought a bottle of whiskey, and asked her if she had a flask I could buy. She said the nonsensical State liquor laws prohibit her from selling flasks to put liquor in. Not a big deal, but made absolutely no sense.
Who knew that having a cocktail with your Saturday night steak could be so complicated?
Once again Tate, Jason, and Delbert and all the so called "let's make govt more efficient" liars sit on their asses while we have the most ridiculously out-of-date wine and liquor distribution system in the world. Keep up the great work guys! Why do we need a state warehouse? Virtually every other good delivered to this state gets here just fine without this stupid bureaucratic obstacle.
Thankfully, I don't like the taste of hard alcohol, and I brew my own beer because its cheaper, and I can make beer styles that are not sold in Mississippi.
this problem will be fixed real soon.
the legislature is in session and when they show up all the watering holes in the metro to booze it up and let the lobbyists pay the tab, and they find out their favorite brand of bourbon is not stocked , they will immediately get to the bottom of this.
Also in the PEER report on SB 2844 under RECOMMENDATIONS:
2. As required by SB 2844, Section 4, DOR shall complete the resumption of control plan in the event DOR shall have to resume control of operating the ABC warehouse upon terminating the third-party warehouse operation contract.
Raise your right hand if you think this plan exists.
Raise both hands if you think this plan exists and is a plan that would allow a successful resumption of control and operations with the current situation.
retailing liquor was probably the mississippi legislatures first endeavor at the state going into business back about 1969.
its worked out about as well as the state run beef plant back about 2003.
It's only complicated if you buy your liquor or wine in Mississippi!
This reminds me of the overhaul at the US Post Office. Almost looks like intentional sabotage.
I really think I am done with almost every one of these useless Republicans that I have cast a vote for thus far.
Mississippi is a joke and these old career politicians are utterly useless. They treat us like pathetic peasants while they get rich and do nothing to better our state.
I swear, each session is progressively worse and more of a waste of time with nothing to show for it.
C'mon Reeves. Graham reports to you. He needs to be fired TODAY.
Where is the state’s attorney general’s office in this situation, actually all situations involving state agency contracts? Where is the legal oversight?
I remember years ago when one of our state’s universities had to pay a coach’s full remaining contract because the contract lacked the necessary protections/language.
This is a true hold my beer and watch this, I know what I'm doing moment.
The state shouldn't be in the liquor business, period. Go pave a road somewhere.
Same AG staffers that green lighted the TANF spending? Not clear that there is the expertise there you are seeking.
No doubt why it went to an incompetent, unprepared, out of state vendor, now is it?
Classic FUBAR situation. Raise a final toast to the business geniuses at ABC and Ruan.
this is good reporting. of course other outlets will run a very watered down version now that they can read this
The state's control of the ABC is antiquated and needs to be abolished. I drive to Louisianna because we don't get any good allocations and when we do, the local liquor stores want to charge Pappy Van Winkle prices for Weller and Buffalo Trace. I'll spend my money elsewhere until they get this straight. I am not alone in taking my money elsewhere as I know of a lot of other people that do it, or get their friends to buy out of state when they are there. The state is losing more money than they are making.
this is not a R or D issue....this is the state of MS has no business running a distribution wharehouse. PERIOD.
Many comments about the 'negative' side of privatization, but they miss the mark. Yes, the state contracted out the operation of the "state's" liquor business and under the circumstances this could be defined as 'privatization' but - it misses the real definition.
The state should get out of the liquor selling/distribution business - that would be true privatization. Some asked, how do they do this in LA; others suggested looking at the beer industry. Those are on point. The state should not be in the liquor business, either by owning, operating, or contracting out the logistical part of it. That we are in the business is the result of the 1966 thinking looking at the sham of an operation, headed by the infamous William Winter, that had been the liquor non-business in the state. In order to get out of that sham and try to turn it into an honest business, the state needed to control it (thus, the "C" in ABC).
That worked ok for a while - but we are now into a different century. Decades ago we should have gotten out of this business and let the private sector distribute this level of alcohol just like the private sector distributes beer across the state. Anybody see a shortage of Coors, or Bud, or Blue Moon, Stella, or whatever your favorite stout, ale, or IPA might be anywhere in the state? No, because the private businesses that distribute the various brands make sure that their customers - large, medium, or small - have adequate supplies even during the 'rush' seasons (i.e. Mal's St. Paddy, Crusing the Coast, tailgating on campus, whatever).
Privatize. But actually do it; get the state out of the business - let their only role be to collect the taxes.
Careful there with the bragging mister bootlegger. You are admitting to committing a felony!
People are not able to make money to pay their employees or themselves. This bubble is going to be very painful for lots of people.
Did the ABC and DOR have run down and obsolete software and equipment in it's run down and obsolete warehouse before they decided to contract out the operation?
Was the warehouse understaffed and having trouble shipping stock ina timely fashion when they decided to contract out?
Did the ABC and DOR have 70,000 cases of stock above the warehouse capacity when Ruan took over the operation?
Read the full PEER report to get an idea of just how bad the liquor sale and distribution SNAFU was before the contract with Ruan was signed.
They'll never admit it but JJ is their assignment desk.
Please, William Winter walked on water.
We are only spending 95 million on the new warehouse.
hell they sub that out to
Curiously, Costco on the 11th looked to be completely stocked up, shelves and bins full of the inexpensive and really expensive wines... and since I hadn't been able to get what I want at Sam's, of course I stocked up!
People love to pile on Jackson but it ain't the reason this state is #50 in every way...
I shudder to think how much booze gets stolen by employees in Gluckstadt every year.
Bring back G.W."Red" Hydrick and leave the State of Mississippi out of the liquor business and this will never happen.
Casey's Lane had drive up service long before any bank or fast food restaurant ever did.They were like Chick'Fillet, back then they would walk up to your car,take your order,and it would be ready when you got to the window.Damn,why can't it just be simple anymore?
Surface sewage city isn't the sole reason but most certainly is a major reason.
Mississippi is run by the baptist church and it shows ......
this so 1963 , a state in the booze business .....WTF
and I don't even drink lol
Why I agree with everyone that State should not be in the alcohol distribution business, like tobacco, beer, cannabis, etc.
The should be immediately address by the the Gov. by firing the director of dept. of revenue and appoint someone who is capable to transition this mess.
I do not put much faith in any fix by the legislature and we still do not have ballot measures for individuals to get changes.
The last state to repeal prohibition still cannot get it right. Can't believe this incompetence, oh wait, it is Mississippi, I expect more to come.
What a shitshow.
THIS! I am so glad to see it being made public knowledge. Last week, the talks of opening Liquor stores on Sundays & Ordering wines from out of state. That needs to go on the back burner until the State gets ABC under control or better yet, privatize it.
Is anyone wondering whose palms Ruan greased to get this contract? You know that's what happened. I would suggest that the AGs office should look into it, but you can bet that if her Republican cronies were involved, there will not be any attention from the AG.
Where’s Soggy Sweat when you need him?
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