How to Spot a Failing Company like Harvest Sherwood
The recent Harvest Sherwood bankruptcy rattled the food distribution industry, but the warning signs were visible for a long time—just not always recognized. Companies rarely implode overnight; they unravel through a sequence of shifting excuses, frequent supply chain failures, and leadership turmoil. If you rely on suppliers or distributors, spotting these red flags early is critical.
Rotating Excuses for Supply Chain Failures
A major indicator of trouble is persistent supply chain breakdowns attributed to a rotating cast of culprits—weather, driver shortages, supplier disputes, labor shortages—week after week. Legitimate issues do happen, but well-managed companies have backup plans. Harvest Sherwood’s constant blame-shifting suggested a lack of real fixes and hinted at deeper dysfunction, from poor forecasting to weak financials.
Financial Instability in Disguise
Despite announcing more than $4 billion in revenue, insiders revealed razor-thin margins propped up by risky inventory bets. Vendors complained about delayed payments, and the company had to slash prices to move excess stock. The moment a key customer (Sprouts) pulled a major contract, the entire financial framework collapsed. This kind of dependence on one big account is a classic sign of fragility.
Operational Breakdowns
Success in distribution hinges on discipline. Harvest Sherwood’s collapse highlighted four critical flaws:
Outdated Demand Planning – They were stuck holding $25 million worth of tray-pack chicken after losing a buyer.
Ineffective Technology Use – ERP investments existed on paper, but day-to-day operations still relied on spreadsheets.
Decentralized Decision-Making – Individual branches operated almost like silos, missing out on bulk efficiencies and consistent pricing.
Repeated Consultant Failures – New “solutions” never fully launched, draining resources without real progress.
These patterns—lack of accountability, incomplete tech adoption, decentralized purchasing—are common where management struggles to enforce standards. And while each symptom might look isolated, together they form a portrait of a company on the brink.
Already Seeing These Warning Signs?
Even if you’ve taken steps like diversifying vendors or upgrading systems, those moves won’t help much unless you coordinate them into a strategy that anticipates problems rather than reacts to them. Contact us to learn how we can help you recognize—and address—these red flags before they escalate.
