Many of you are probably familiar with Archway cookies- they come in a signature red package that's hard to miss on grocery store shelves. Until I read the recent New York Times article "What Happened to Archway?", I had no idea that the company was in any kind of financial trouble.
It turns out that Archway had been having some major cash flow problems for months, and that in order to retain the financing they were receiving from Wachovia, the company cushioned its books with non-existent sales. In addition to what equates to accounting fraud, the company has been accused of providing defective or unsellable products to its distributors and retailers and then making it difficult for these business partners to receive credit on these orders.
What scares me is that, there must have been at least several executives who knew what was going on, yet turned a blind eye. By engaging in these kinds of activities, Archway let down its employees, its distributors and the retailers that carried its products. Archway's demise carries lessons that any small business can learn from, whether involved in the baked goods business or not. Despite being a 60-some year old company, it appears that all the high-quality and integrity associated with the Archway brand and its cookies disappeared in just a few short years or even months. Compromising the quality of your products and the relationships you have with your business partners is a sure fire way of decreasing the value and success of your company.
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