Extreme Enterprise

Earl Scheib promised to paint any car for $99.99. Victor Kiam liked Remington razors so much that he bought the company. However, no company owner/pitchman can match Mother Boyle when it comes to ensuring product quality. Whether it's dangling from a cliff or racing a four-wheel drive vehicle with her son Tim strapped to the roof, Columbia Sportswear's ads proclaim that before the company's products pass Mother Nature, they must pass Mother Boyle. One ad had Gert Boyle donning a tattoo on her bicep that read "Born To Nag" - proving to any doubters that she was, in fact, one tough mother.

There is no denying that the ad campaign was more successful than anyone could have predicted. Since launching the television and print spots in 1984, Columbia has seen its annual revenue increase from $3 million to $470 million in 1999. But, the company had to meet the logistical challenge of satisfying customer demand. That daunting task was left to Columbia's domestic DC (distribution center) located just outside Portland, OR. As far as company growth was concerned, it was a slight case of being careful what you wished for.

The company's growth reached a point in 1997 where all cylinders in the DC had to be hitting just right in order to keep up with demand. The DC, which was built in 1994 and expanded once, was scheduled to receive another addition. Once completed, the facility would have more than 1 million square feet of floor space. Also, Columbia had secured new customer accounts that altered the way the company did business. "We took on some key accounts that added significant volume to our distribution. In addition to the volume, it was also the amount of shipping we had to do," recalls Dan Dougherty, technical services manager at Columbia. "One particular account had well over 1,000 stores with several subdivisions in each store. Each subdivision received individual shipments one to three times each month. With this one account, we essentially added 15,000 to 20,000 new customers overnight."

Because Columbia only operates a handful of outlet stores and one flagship store (Portland, OR), distribution to its thousands of accounts is really where the rubber meets the road for the outdoor clothing manufacturer. This point was not lost on Tim Boyle, president and CEO at Columbia. "Tim handed down a mandate that stated distribution would not constrain the growth of the company. You can simply say those words, or you can back them up with your pocketbook. Tim did the latter," says Dougherty. "As a result, distribution is not a constraint. We are able to keep up with a raging sales force that is selling a very hot product."

Integrating Distribution With An Enterprise System
By April 1999, Tim Boyle's pocketbook was a bit lighter, but Columbia now had a new distribution system in place. The company implemented a UNIX version of Manhattan Associates' (Atlanta) PkMS supply chain management software. Manhattan Associates' distribution solution was integrated with Columbia's new enterprise system from J.D. Edwards (Denver). To reduce the amount of redundant data transmitted between the two systems and cut programming time, Columbia used five standard interfaces:

• Pick Ticket Download — This interface allows for the download of orders from J.D. Edwards to PkMS.
• Invoicing Upload — This interface allows for the upload of pick ticket data from PkMS to J.D. Edwards.
• Item Master Download — This interface allows for the download of item master data from J.D. Edwards to PkMS.
• Purchase Order Download — This interface allows for the download of a purchase order from J.D. Edwards to PkMS.
• Perpetual Inventory Transaction (PIX) — This interface allows for the upload of all inventory transactions from PkMS to J.D. Edwards.

"Big Bang" Implementation Causes Problems
Leading up to the go-live date for its new enterprise and distribution systems, Columbia was expanding its DC by adding another 300,000 square feet. This meant the addition of several new material handling systems. Also, Columbia was working with a new database, which was provided by Oracle. "We did all of the things that the book tells you not to do," quips Dougherty. "We were successful with the ‘big bang' approach, because we ultimately accomplished what we set out to do. However, I wouldn't recommend it to anyone. We just didn't have a choice."

While the implementation at the DC was successful, there were not many pats on the back handed out initially. In the first week of operation, there were problems with data transfers between J.D. Edwards and PkMS. Operational problems arose concerning the new material handling systems that included conveyors and carousels. Columbia also experienced problems with its Oracle database, and there were issues surrounding the performance of other hardware components. "We didn't experience big problems with one particular area. There just seemed to be an awesome list of small problems from all areas," remembers Dougherty. "The first couple of weeks were tough. By the next month, we got our legs under us again. Two months later, we were setting new shipping records."

At this point, Columbia continues to set new shipping records. On the inbound side of operations, the company recently established a new mark by receiving more than 2 million units in a month. On the outbound side, the company set a record by shipping 172,000 units in one day and more than 2 million units in one month.

Archived Records Help Reps Service Accounts
When you're shipping more than 2 million units per month, accuracy is a major concern. Since the new system has been in place, Columbia's DC has averaged 99.9% accuracy in its shipments. The company's old system was not nearly as effective. "We looked at accuracy numbers from the old system. There were only four days where we measured a shipping accuracy of 99%," says Dougherty. "We consistently beat that mark with the new system. And, we have the controls in place to maintain that level of accuracy."

Of course, 99.9% accuracy is not perfection. So, Columbia has to handle inevitable customer service calls regarding such items as the quantity and type of products received at retail stores. Typically, Columbia maintains up to 60 days worth of shipping, receiving, and order data using online magnetic storage. For data that extends beyond 60 days, the company has created a history file that is stored and maintained by the J.D. Edwards host system. "We might have customer questions regarding a shipment that took place nine months ago," explains Dougherty. "We have to keep customer orders on hand indefinitely. Once this order data reaches a certain date, it is migrated and stored to magnetic tape."

By accessing stored data on such items as customer orders, invoices, and payments, Columbia's customer service representatives can typically resolve issues from their desktops. Occasionally, the customer service reps may have to work hand-in-hand with managers at the DC to resolve a customer service call. "Some problems cannot be immediately solved by our reps. So, they have to do a little research to arrive at a complete answer for the customer. In these cases, the reps contact the DC, and we can explain what happened with a particular shipment or inventory issue."

Keeping Customers And Suppliers On The Same Page
Customers who visit Columbia's Web site see that the company does not sell its products directly to consumers. Instead, the goal of the site is education — about the company, products, and Columbia retailers. "We are more focused on the business-to-business aspects of e-commerce," says Dougherty. "We are concentrating on improving our relationships with our partners. We want to use the Web to keep our customers better informed and to be better informed by our suppliers."

To that end, the DC receives a forecast - by season, quarter, and annum — of the items to be received by the facility. Suppliers exchange manufacturing and order information with Columbia headquarters. Shipping information, such as overseas or domestic transport, is also sent by suppliers to Columbia headquarters. That data is transmitted from the J.D. Edwards host to Columbia's DC. "We evaluate the forecast information and then staff according to those plans," says Dougherty. "We build the shipping files as the shipments near the DC. We build the receipts and bring the shipments into the facility."

When Columbia went live with its new system in April 1999, there were 325 full-time employees at the DC. Since the go-live date, the number of employees at the DC has increased slightly, and volume handled at the DC has increased dramatically. "There is nowhere near the same growth rate between the variables," adds Dougherty.

A new generation of consumers has certainly given rise to the demand for outdoor clothing and accessories. These consumers are young, active, and willing to spend money on leisure time pursuits. Any outdoor clothing company could have recognized this opportunity. Columbia, with a full line of products and a creative marketing campaign, was the first to do so. For that foresight, the company is now the number one name in the industry. "We wrap a few key words around quality products. Some of those words are American, authentic, action, outdoor, and value," says Dougherty. "We have promoted this through our advertising, and we have secured key accounts to present our products. Right now, it's fun to be us."

Questions about this article? E-mail the author at EdH@corrypub.com.