Early in 1984, the top executives of an East Coast hardware chain made a momentous decision. Without consulting the company’s suppliers, they decided to phase out its fleet of trucks and its network of warehouses. Maintaining this distribution system was costing the company about 5% of annual sales, and the executives believed the company was a large enough customer to expect suppliers to deliver directly to its outlets. According to the plan, if a supplier refused, the chain would buy its products through a wholesaler.
A version of this article appeared in the November–December 1989 issue of Harvard Business Review.