Figurine manufacturer keeps
tabs on the goods
High product value makes accuracy, not speed, important for
Goebel N.A.; batch terminals provide a cost-effective method
Not every warehouse management solution requires real-time information,
nor does it focus only on decreasing material handling time.
When the primary concern is accuracy, a less costly solution
is batch terminals. At Goebel North America, makers of M.I. Hummel
ceramic figurines, the emphasis is on accuracy and volume of information
for tracking high-value products. For Goebel N.A., the batch solution
has cut inventory taking from weeks to days, with a dollar accuracy
of approximately 99.7%, for two-thirds the estimated cost of a
real-time data collection system.
A wholesale distributor, the company's 2,500 different items
retail from $50 to more than $1,000 at specialty gift shops and
department stores such as Carson Pairre Scott, Dillard's and JC
Penney. Not surprisingly, the volume of merchandise passing through
the facility is greatest just before Christmas. Forty percent
of sales occur in the fourth quarter.
Goebel N.A. recently completed its three-day physical inventory
taking, using hand-held data collection terminals to record inventory.
While other companies might think three days is a long time for
the volume of inventory, Fred Root, director of finance, says
for them information accuracy was more important than immediacy
because of the high value of the merchandise.
Root puts the situation in perspective. "Each shipment has 500
to 600 master cartons, at several thousand dollars each. At inventory
time, we have about 30,000 cartons. Taking three days [for physical
inventory] is not a problem for us."
Bar codes have system humming
The company has instituted full bar coding in its Pennington, NJ,
facility, applying Code 128 bar code labels to putaway locations,
then marking inventory as it is received from the parent company
W. Goebel Porzellanfabrik in R�dental, Germany.
Each carton is identified by the bar-coded four-digit container
number, plus a four-digit carton-specific number. "If we have
to go back and check anything, we know which cartons are there
because they were scanned," says Root. Data collection is handled
using MEQ 430 programmable terminals made by Mars Electronics
and distributed by Compsee.
The solution design and implementation was handled by Ted Flick,
owner of ScanLink, Cinnaminson, NJ, a Compsee value-added reseller.
"We chose Ted and ScanLink because of the service he offers,"
says Root. "Other vendors we talked to were basically interested
in selling us hardware. Ted was willing to provide us technical
assistance. We felt that was as important as the equipment."
Power Label bar code label design software from StrandWare creates
labels that are printed on Sato America M8400 thermal-transfer
printers. 4 by 6-inch labels are standard Tiger brand stock from
Moore. Using Mars' Marsware program generator software, Goebel
N.A. designed its own applications for the portable data terminal.
"Ted showed us how to use the label design software, helped
us design the label, and is available anytime we have problems.
We have a great deal of confidence that if we need him, he'll
be there to help us," Root adds.
Labeling solution evolved
Goebel N.A. first started scanning two years ago and has since made
some improvements. "When we first did this scanning, we were neophytes.
We were doing three scans per carton, for a product ID, carton ID
and quantity," Root says. With all that scanning, mistakes were
made.
"We'd show a quantity of 100,000 that should have been 10. Now
we've relabeled the boxes so we do it all in one scan.
"Overall, our inventory has been quite accurate. We've never
been more than about one-third of 1% off in dollars. But there
is more variation within the SKUs. Sometimes SKUs are combined
together in sets and given a different SKU. Most of the errors
have been because of this type of mislabeling," says Root. "Our
management has been pleased, but our goal is to get greater accuracy
on individual SKUs.
Once inventory is taken, information from the batch terminal
is uploaded to a Gateway 2000 PC and transported by diskette to
an IBM AS/400. The AS/400 produces a 1,000-page inventory report.
Inventory variances must be identified and then reconciled, a
process that takes two more days. Discrepancies between actual
and book inventory are manually verified and corrected.
Even though year-end physical inventory takes several days and
about 200 labor hours, it is a much-improved process. "Before
we added bar coding inventory took more than two weeks. We used
preprinted IBM cards and put the cards out in each of 20,000 warehouse
locations. Inventory-takers had to hand-write the quantity for
each on the card, and then that was entered into the computer.
"Eventually we'll get down to less than a week, once we get
the reconciliation process streamlined," Root predicts. "The AS/400
computer prints out exception reports on the SKUs, and we recount
anything that is off by a certain percentage. Usually we find
the product is there, but is has been mislabeled or not scanned.
It is easy to verify counts with discrepancies because the physical
count lists every carton individually by location."
Physical restrictions
Root says the warehouse design itself is the major reason inventory
taking runs as long as it does. There's no palletized storage; cartons
are stacked on shelving 40 feet high in a very narrow aisle configuration.
Lift machinery carries one or two workers in cabs to specific locations
so they can count inventory.
To prevent separate warehouse inventory teams from scanning
the same carton twice, the warehouse is segmented into scanning
routes, and workers apply a small sticker to each carton after
it has been scanned.
If, however, the inevitable happens, duplicate carton numbers
are caught and flagged by the host once data from all hand helds
has been uploaded. Without this step, the computer could in effect
add inventory by recording multiple cartons with identical numbers.
Luckily, this can only happen through two separate terminals scanning
the same carton. No terminal will accept the same carton number
twice.
Price, requirements dictated solution
Root says the company chose a batch solution rather than radio frequency
data communications because of lower price and because Goebel did
not need real-time information. "We aren't scanning on a daily basis,
and RF would have been difficult because the warehouse has a huge
amount of flat metal shelving. We would have had to set up several
radio transmitter locations. Our investment in this equipment was
about $35,000, including terminals and printers."
He likes the infrared transmission from the batch terminals
to the communications node, noting that the transmission can withstand
a certain amount of stress. 'Someone once picked up the MEQ 430
terminal before it had transmitted the full file. When he set
it down, the terminal did not miss a beat, it communicated the
whole file."
The carton labels are used for more than just inventory. Goebel
is using the UCC/128 carton labels for shipments to retailers,
and supplies its retailers with advance ship notices (ASNS) transmitted
via EDI.
Bar coding applications are being expanded beyond warehouse
inventory, too. Root says the company has recently bar coded its
sales literature for better inventory control. In the near future,
Goebel N.A. intends to integrate stock receipt into warehouse
inventory and use bar coding for receipt and putaway, as well
as for picking, packing and shipping.
The company also is looking at using bar coding to streamline
handling the hundreds of items that are returned to the warehouse
each year. Though not as valued as its figurines, Goebel N.A.'s
Auto. ID system may turn out to be priceless.
Reprinted from:
Automatic ID News
Advanstar Publishing
May 1998
Facts at a Scan
User:
Goebel North America, Pennington, NJ
Application:
Inventory Tracking, Physical Inventory Taking
Benefits:
- Time spent on physical inventory cut to three days, with
additional time savings expected in the near future.
- Dollar accuracy of inventory increased to 99.7%.
- Batch System installation estimated to have saved one-third
over comparable real-time system.
