Warehouse managers wish it would go away; employees hate working with it; yet thousands of warehouses each year continue to use it. The answer to this riddle is paper. Using paper to track warehouse operations like receiving, picking, and packing is still a common practice. After all, some paper-based warehouse systems work fine, and if a system isn't broken, why fix it? But what if a system is broken, or at the least, not as efficient as it could be? Such was the case with MacPherson's Artcraft (Emeryville, CA), a wholesale distributor of art supplies (e.g. paints, brushes, easels, and pens).
In 1998, MacPherson's had an unusual impetus for changing the warehouse operations at its western distribution center (DC) in Emeryville, CA. The building was being destroyed in order to build a new city hall. To further complicate matters, the company's order entry system, SFD (solutions for distributors) was not Y2K compliant. MacPherson's was using SFD's overstock location tracking system module. This module was going to be discontinued by SFD and no longer supported if any problems would arise. "Although we had received the source code when this module's support was ended, we really didn't want to spend money to bring a barely adequate system up-to-date," said MacPherson's MIS Manager, Ralph McLemore.
Why Keep A Paper Process In Place?
Prior to moving the DC to its new location in Reno, NV, MacPherson's analyzed its existing warehouse operations for deficiencies. All order and receipt processing was being done on paper at the end of each day. This system provided no real-time visibility of orders or receipts and no ability to accurately validate the quantity of a product on hand. Furthermore, the inventory process was taking three ten-hour days requiring the entire facility's staff (yes, even the office personnel).
Although MacPherson's couldn't use the warehousing functions of the SFD software, the company still was able to use SFD's business software (e.g. accounting). Thus, in the new warehouse, SFD would still act as the company's host system. For MacPherson's warehousing software needs, SFD recommended Intek Integration Technologies (Bellevue, WA). SFD had already used Intek's warehouse management system (WMS), Warehouse Librarian, with some other customers. Through Distribution Resources Company, SFD also had completed a host interface module for Warehouse Librarian. After comparing some other WMS products, MacPherson's finally chose the Intek system.
Creating A Profile Of The Efficient Warehouse
Starting from scratch in a new 100,000-square-foot warehouse location afforded MacPherson's the luxury to design the most efficient warehouse configuration according to the company's business. The problem, though, was figuring out just how to accomplish such a feat. Luckily, Intek provides complete Warehouse and Slotting Analysis with the installation of Warehouse Librarian. "The Warehouse and Slotting Analysis really had an effect on our business," McLemore said. "The software analyzed our operations and told us how many picking locations we would need. It assigned each location a velocity (amount of times an item is picked) and then matched the products' velocities to the slots available for storage." After this analysis was complete, MacPherson's contacted a racking company and gave them the specifics for building the most efficient racking system.
With the new warehouse finally designed, the next step was to add the hardware needed for this new system to work. A wireless LAN (local area network) was installed and employees were equipped with Telxon (Holtsville, NY) 960 wireless handheld scanners. A new Windows NT server became the home of Warehouse Librarian, while Zebra (Vernon Hills, IL) 500 and 600 series bar code printers created the products' "license plates". The entire installation took nearly 10 months from signing the contracts to having the system go live.
18-Month ROI, 49% Cut In Returns
During the Return on Investment (ROI) Analysis stage of the process, Intek determined MacPherson's would achieve a 21-month return on investment (ROI). Instead, McLemore estimates that a payback was achieved in approximately 18 months. The most immediate result of the new WMS was a 49% reduction in returns related to picking errors.
"We measure warehouse productivity by lines (single picks for one item ordered by a customer) picked each month divided by paid hours," McLemore explained. "Before implementing Warehouse Librarian, we averaged 19 to 20 lines per hour with peaks of 22 to 23. Now our average is 26 to 27 lines per hour with peaks of 35." For the first three months after the system went live, the company fell below its previous average monthly productivity measures. However, after the initial three months, it consistently bested all previous averages. For the last year and a half, the DC has been consistently outperforming the company's other three warehouses (which are still paper-based) by an average of 28% with peaks of 40%. With this kind of success, MacPherson's is considering installing Warehouse Librarian in its other warehouses.
Questions about this article? E-mail the author at DanS@corrypub.com.