Warehouse management - it's all about the numbers
Kristine Ellis -- Casual Living, 7/2/2011 4:59:33 AM
RIght before the recession hit in 2008, Leader's Holding Co. completed construction of a 50,000- sq.-ft . warehouse to supplement its 120,000-sq.-ft . distribution center in Largo, Fla. The company had outgrown the original space by 2006 - so much so that at one point it had more than 30 storage containers of furniture sitting outside the building.
Fast forward to 2011 and, despite continued growth that includes the company's best month in its 40-year history, March of this year, the original fully racked, binned and bar-coded 120,000-sq.-ft . space within the distribution center is plenty.
"What changed wasn't the economic condition," said Tim Newton, managing director of Leader's Casual Furniture. "Rather, we are getting better and more accurate information and balancing our inventories to what actually moves."
Underpinning that accuracy is an inventory and warehouse management system that tracks every piece of product coming in and going out via individual serial numbers and a radio frequency (RF) scanning system. The exact location and history of any piece can be found simply by logging into any of the 200-plus computers throughout the company.
"We can learn who touched it from the minute it came into the receiving dock, who put it away, who moved it, who picked it, who touched it up, who put it on the truck and if it came back from the customer - anything at all that's happened to it," Newton said.
As good as the system is, Newton and Kathy Horner, Leader's director of operations, have spent the last three years planning a major upgrade that is now underway. When fully installed, the new customized soft ware is expected to increase efficiency by as much as 40% through more powerful interleaving capabilities, automated performance tracking, reporting and more.
In the meantime, the planning process itself has driven greater efficiencies.
"In the last three years alone, while we have been measuring performance and studying our processes, we have been able to increase efficiency - dollars delivered divided by man hours worked - by 22%," Horner said.
In picking, Leader's cut 46 seconds from the time it takes to pick an item, bringing the average length of time down to 1 minute 25 seconds. Given that Leader's 2011 daily average number of pieces picked and prepared for distribution is 1,350, that 35% improvement is substantial.
The savings came in part from upgrades in hardware, wireless signals and increased access to information as well as interleaving - that is, organizing data to support performance - to drive "one-pass picking." Teams pull product according to bin location rather than by customer orders to make every trip down the aisle as effi cient as possible. With the expanded data supplied by the new system, teams will put away inventory going down the aisle and pick on their way back out.
Horner also credits charting and reporting for the recent and expected performance improvements.
"It helps accountability, which boosts the morale of those people doing the most work and makes those who are not producing as much try to do better," Horner said.
Horner and Newton have had to manually mine performance data tracked by the current system, but the new system will automatically create these reports and broadcast high-performer results throughout the company on computer terminals and large fl at screens.
Leveraging technology has been an integral part of Leader's business strategy, but the more the company has grown, the more important technology becomes, Newton said.
"When you have one or two stores, the owners are involved in the culture directly because they can be a part of almost every process," he said. "We really try to mimic that here, with company leadership involved as much as possible. We use technology to consistently direct an efficient predetermined distribution strategy. The computer is present 100% of the time to maintain culture and accountability."
Technology isn't as central for efficient warehouse management at Leisure Living in Salt Lake City.
Marc McDonald built his 65,000-sq.-ft . distribution center a few years ago to streamline receiving and delivery for the Salt Lake City single-store company. The old facility was so small that warehousing was a matter of putting stock wherever you could find a spot, whereas in the larger space, product is organized by vendor.
"Anyone can go down to the facility and find what they are looking for now and do it quickly and efficiently, so we've eliminated a lot of ‘where's this' and where's that,'" McDonald said.
Inventory is linked to the point-of-purchase system, but other than that, McDonald doesn't see any need at this time for a RF management system.
He sees his biggest efficiencies coming from having sufficient space to preassemble product during the slow periods and stage orders a week in advance. In addition, interior loading docks allow secure loading the night before delivery, while the mezzanine floor in the middle of the space enables effective use of all of the space.
"I don't have any wasted air space, nor do I have to work off of a racking system," McDonald said. "I think with a racking system, you lose the ability to store product efficiently; also, you don't have the danger and damage associated with forklift s."
The Greenhouse Mall's approach to warehouse management falls somewhere between those of Leisure Living and Leader's. The Austin, Texas, retailer has three locations, all served by a single 12,000-sq.-ft . distribution center. Although the company does not use an RF system, it is interested in doing so.
"We plan to look into it when we upgrade our [POP] soft ware at some point, so we are always asking other retailers what they are doing," said Tracy Wolfram, general manager.
The biggest challenge is tracking transfers between stores and the distribution center, particularly in what has become a very busy season. Although Wolfram said the situation is much better than it has been in the past, too oft en product isn't physically where the computer reports it to be, particularly with the hottest selling products.
"We've added staff this year because once you get behind in the warehouse, especially this time of year, it is almost impossible to catch up," Wolfram said. "Luckily, we have a good group of people who are willing to go the extra mile to get it done."
The season's fast pace is also affecting some of the manufacturers.
"Everyone has had some trouble meeting the in-season demand that has gone up along with smaller early buys, but we're adjusting," said Jan Trinkley, vice president, Gensun Casual.
Though Gensun doesn't use RF technology, it does have a precise tracking system in place and is currently installing soft ware that will allow its sales reps, and ultimately its dealers, to go online and track inventory themselves.
"We do need to move more into automation, but right now everything is done by a group of very good, very conscientious and very hard-working people," said Trinkley.
Automation is being stepped up at NorthCape International, but the bigger focus is getting more out of each of its four regional distribution centers.
"In the New Jersey and Chicago areas, we have the right-sized facilities; we're just learning how to use the space more efficiently," said Tom Murray, president of NCI. "We'll increase the Florida facility by 25% in the next year, and probably increase our California facility another 50%."
Murray believes NCI's strategically located warehousing program is one of its strongest competitive advantages for national coverage. Another company strength is the online inventory system, which was upgraded this year to make it even easier for dealers to negotiate.
"It allows our dealers to use our warehouse as their warehouse, which is a huge advantage for the dealers from an efficiency perspective," Murray said.
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