Newton, Mass.—A shakeup at supplyFORCE included more layoffs and executive level changes, company officials and industry sources say.

The company formed by Affiliated Distributors 16 months ago said it cut back to a lower cost structure to match a recent shift in business strategy. Sources said Bill Weisberg, A-D's CEO and chairman, stepped aside as supplyFORCE's CEO in February and that the departure of other senior managers such as Steve Cosgrove, the president and COO, were planned.

Neither Weisberg nor A-D president Chris Hartmann would confirm or deny those moves.

"We have made some changes and Bill is still very engaged," said Hartmann, whom sources said has moved over to run supplyFORCE temporarily. Hartmann did not comment on his role with supplyFORCE.

Weisberg said the company would not yet announce personnel changes, but said his position with A-D had not changed.

Sources said a large number of the company's nearly 160 employees were laid off in January, with the information technology staff particularly hard hit. That followed a reduction of 20 percent of supplyFORCE's workforce in December, while another 10 percent of employees were re-deployed to support national accounts. Weisberg acknowledged the most recent layoffs.

"There has been no change in direction or ownership at supplyFORCE," Weisberg told ID in mid-February. "In November we determined to focus only on national accounts, integrated supply and the technology to support that. In February we made some additional organizational alignment and headcount changes based on a two-month study to determine exactly how we should be structured to maximize our effectiveness and path to profitability towards that aim. There were no performance-related departures that I am aware of.

"All of the steps we are taking at supplyFORCE, and will take, are designed to ensure that we provide our distributors and national account customers with a long-term solution that meets their needs. Our right-sized organization has a very low cost structure that enables us to operate indefinitely."

One A-D member, Wes Delnea, president of Windsor Factory Supply Ltd., said scaling back personnel makes sense with the strategy shift announced late last year. SupplyFORCE stopped targeting small end users with its e-procurement offer and said it would focus on larger accounts and integrated supply customers.

Delnea said many A-D members are happy with the shift. "[SupplyFORCE] will use the industrial distributor base better, and the national accounts focus is going very well," he said.

"The guys at AD are very happy because it's more industrial," Delnea added. "It's back to business-to-business. That's the focus we wanted them to go."

"The key is you have to show a profit at the end of the year, and that's what supplyFORCE is doing now," Delnea said. "I wouldn't go into these national account agreements if I didn't have confidence in them. That's my bread and butter ... I'm very positive on it."

Several supplyFORCE members and industry observers suggest the firm spent too much on technology during its first year, which failed to pan out. The company raised more than $87 million in venture capital and spent heavily to build a network and searchable online catalog so its members could conduct e-commerce.