Learn how Harbor Foods overcame three major crises in 2011–2012, including a failed system rollout, a multimillion-dollar tax audit, and the loss of its largest customer, through resilience, leadership, and teamwork.
Chapter 7
Crises and Breakthrough
Just four months after moving into the new Lacey Distribution Center (LDC) in May 2011, Harbor faced a major operational crisis. The company launched a new Warehouse Management System (WMS) and Enterprise Resource Planning (ERP) system in October 2011—both of which failed to function properly. The WMS couldn’t locate products, causing delivery errors. The ERP system disrupted invoicing, payments, and reporting. Trucks were stuck in the parking lot, and orders were shipped without invoices. Customers received incorrect products, and drivers struggled with returns. Scott Erickson, Harbor’s IT leader, worked tirelessly to resolve the issues over the next year.
While dealing with the system failures, Harbor was audited by the Oregon Department of Revenue for miscalculations in Other Tobacco Products (OTP) taxes from 2008–2010. The audit revealed a $3.9 million tax liability. The ERP system exposed additional accounting errors, leading to a total discrepancy of $8.8 million. Harbor’s balance sheet couldn’t reconcile, and the company faced a liquidity crisis.
Justin Erickson and Jeff Anderson secured emergency funding from family and board members. Harbor’s banking partner, Wells Fargo, demanded $2 million in working capital, which the company didn’t have. Justin refused to pledge personal assets and instead restructured the finance team, replacing the CFO and controller.
Harbor’s largest customer, Walgreens, accounting for nearly $80 million in annual sales, ended its contract. The account had become less profitable due to long-distance deliveries and pricing pressures. Despite the loss, Harbor’s leadership saw it as a necessary reset to refocus on sustainable growth.
Jim Winkle, a seasoned CFO, joined Harbor in 2012 and helped stabilize finances. Justin and Jim worked closely with Wells Fargo’s special credits division for nearly a year. In 2015, Harbor switched its banking relationship to JPMorgan Chase. The crises strengthened Harbor’s leadership, culture, and operational discipline.