I have been attempting to get information about the changes at Mary Kay Inc., but it has been challenging. Although the active distributors have received a bit of information, the details have been kept at the levels of upper management and executives. Employees below that level don’t know exactly what is coming, and only know what they are seeing when people are being let go.
As we already know, four distribution centers are being closed between now and July. This is a loss of 200+ jobs. The official announcement went like this:
Special Message from Nathan Moore
It’s the beginning of a new year, a new decade and, as always, a renewed excitement about what’s in store for you and our great Company in the future.
When I assumed the role of President of the North America Region, one of my top priorities was alignment and clear focus so that Team US could provide the best support for you and your area members. So, we made some changes to the organizational structure of the US staff located at The Mary Kay Building to help ensure that we are set up for success.
The next step in this process has been reviewing the structure and performance of our outlying distribution centers. As you know, the landscape of shipping has drastically changed over the last 10 years with the astronomical growth of online ordering. With this in mind, I asked my team to analyze our distribution model to understand how we should be set up to address the evolving shipping landscape and better meet the needs of the sales force. In short, I asked for better customer service and faster product delivery times.
After much analysis, we’ve made the decision to change how we run distribution. We must improve our turnaround time on product orders. And though it might seem that simply changing a process here or there would solve the problem, we learned that we are no longer in the optimal locations to meet evolving shipping demands. So, this reorganization is the best option to better meet current demands and position us to be highly competitive in the future.
As a result, we are reorganizing to three distribution centers and changing the locations of distribution centers outside of Texas. These new locations will be warehouse centers only. With these changes, we have restructured our customer service function, and centralized the Customer Service group in Dallas. Having them in one central location will help ensure consistency and continuity.
My expectation is that after we have completed this transition, you will receive unparalleled customer service and faster delivery of product orders.
And, as you know, in 2017 we created the Field Support Team. It had been many years since we had staff embedded in the field away from The Mary Kay Building. We had an existing “branch” model with both customer service and distribution, as well as under-utilized space from a time when sales counters were functional. As we looked at our future distribution model, and the U.S. organization overall, we realized that this structure with the Field Support Team was not sustainable. As a result, we have made the very difficult decision to dissolve the Field Support Team function. Rest assured our Sales Force Development and Sales Education teams will continue to ensure that you will receive all the coaching, educational and motivational support you need to grow your businesses and achieve your goals.
We will be sure to update you when we have finalized the two new distribution center locations. I am confident that these new moves and structure will set us up for great future success and will help you provide exceptional service to your customers!
President, North America
I also understand that various departments at corporate headquarters are being eliminated or restructured. Departments already affected include marketing, IT, quality, and engineering. Everyone believes there are more job that are going to be eliminated this year, but there is no official word.
The entire sales development team that was responsible for interfacing with the NSDs (Sean Key and 4 others) was let go a week ago. This is the “Field Support Team” that is mentioned above in the announcement. It appears the duties will be assigned to the remaining sales force development and recognition people (who previously were focused just on sales directors and below). The sales development teams that work with each of the seminar divisions are still intact, but people are unsure of whether any changes are planned there.
Sean Key’s title (per his LinkedIn profile) was Vice President, Sales Force Motivation & Field Support. He was with the company since June 1989. His bio from the “Feel the Power” (eyeroll) Retreat said:
Sean began working for Mary Kay in June 1989 at the Northeast Distribution Center in Somerset, NJ on a part-time basis as a Box Maker. He had just graduated from high school and Mary Kay was a summer job before starting college. In September 1990, Sean began working for Mary Kay on a full-time basis while pursuing his education at a local university. He held positions as an Order Filler, Shipping Clerk, Quality Control Inspector and Customer Service Representative before being promoted to Warehouse Supervisor at the age of 21.
Two and a half years later, Sean accepted a position as the Sales Development Coordinator for the Southwest Region and relocated to the Mary Kay corporate office in Dallas, Texas. Sean has supported the US sales force since moving to Dallas in 1994, and currently, he is the Vice President of Sales Force Motivation & Field Support. In this role, Sean and the Field Support team travel throughout the North America region building relationships, inspiring excellence and providing sound business strategies to the sales force. Sean graduated cum laude with a Bachelor’s Degree in Business Management from LeTourneau University and his personal motto is, “If excellence is possible, good is not good enough.”
Sean has apparently deactivated all of his social media accounts. I am wondering if this restructuring came as a surprise to him. And I’m also wondering why the company didn’t find a different role for him. He *seemed* to be a very valued employee, and the news that he was let go was a shock to to upper level directors and NSDs.
What else do we know?
Mary Kay’s sales are down GLOBALLY, but I think the decrease in the U.S is the most painful. China is hurting as well, I have been told. Apparently there have been problems at the new Richard R. Rogers Manufacturing/R&D Center, so products are still not being manufactured there. The building has been open for more than a year, so it’s got to be a big financial drain to pay for a building that you’re not even fully using. Production has been outsourced to contract manufacturers, and a premium is paid for those services.
In general, Mary Kay is trying to get with the times. They have not REALLY evolved as technology and online shopping has evolved. Yes, you can shop online with your consultant. But selling this “home party” model is getting tougher and tougher.
Consultants and directors now have the ability to order products from MK via an app and have the order shipped directly to a customer through a cloud-based system they call Project ONE. The order gets to a customer in 2 to 3 days, so you can see this reduces the need for distribution centers around the U.S. Also, this reduces the need for customer service employees, so Mary Kay is consolidating this function in Dallas.
It seems that consumer behavior is a major driver in this. Yet it cuts into the MK business model and makes overall sales go down.
If you don’t need consultants to buy large inventory packages anymore (because they can order what they need when it’s sold), corporate’s numbers are going to suffer. We’ve known for years that the initial inventory order is the most that consultants will ever order. So little of the products are actually sold, that subsequent orders from consultants are very low.
If the large initial inventory orders go away, so does Mary Kay’s profitability. It’s a catch 22 for Mary Kay. They can’t keep doing business the old way because consumers won’t participate, but if they evolve the business to keep up with technology, they lose their bread and butter (the initial inventory orders).