A Century-old Retailer Automates Distribution

Haverty Furniture improved efficiency and customer service with a real-time store-to-warehouse link.

 

Haverty Furniture Companies, Inc., headquartered in Atlanta, Georgia, has been doing business in the southeast for over a century. With annual revenues of $375 million, Haverty's (as it's known to generations of loyal customers) has nearly 100 retail stores in 11 states, from Virginia down to Florida, and westward as far as Texas. Stores are clustered into semi-autonomous profit centers, and are serviced by three large regional warehouses located in Charlotte, North Carolina; Jackson, Mississippi; and Ocala, Florida. Each regional warehouse processes several million dollars worth of furniture orders monthly.

For 100 years Haverty's kept track of its paperwork the old fashioned manual way, until the late 1980s when the company began to automate its retail and regional warehouse operations. According to Ed Clary, vice president of information services, who has been with Haverty's since 1990, "When the regional warehouses had a computer system in place-an old IBM series -the challenge was getting inventory information from the regional distribution centers to the stores in a timely fashion. [Once the new system was implemented] I was surprised to see how quickly inventory changed in the regional warehouses minute by minute. Almost second by second."

Haverty's used to send a catalog of available merchandise weekly to all the stores, but store managers still had to phone in to find out what merchandise was really available. "We have a core set of merchandise, some 1500 items, distributed through all three regional warehouses according to demand," explained Mr. Clary. "Our whole challenge with automating was to better utilize these facilities by getting our supply to where the demand was. We wanted to give the stores a window into warehouse inventory."

Another reason for automation, Mr. Clary pointed out, was to enable store managers to prioritize their orders. Until automation went in, the stores had little say in the distribution center docking schedule. The schedule was very tight-"set in cement" Mr. Clary described it-because of the vast numbers of orders coming in and going out of the 150,000-to 200,000-square-foot facilities.

Making the Move to Automation

The Haverty MIS team headed a project to automate the regional distribution centers during the summer of 1993. Ed Clary and Greg Davis, manager of information services (IS), worked with John Gross, Gary Niedermeyer and Don Stout from the Charlotte location, to study, design, and implement a computerized, bar coded shipping, receiving, and inventory system that would also use internal electronic data interchange (EDI) for purchase orders (POs) and advance ship notices (ASNs) to the retail stores.

"We had already implemented bar coded inventory in some of our retail store warehouses," Mr. Clary said. "When I got here in 1990, we had three branches with an automated inventory system. Currently we have 45 of our retail branches automated, which accounts for 60 percent of our sales volume."

In the early 1990s, as Haverty's began automating retail inventory for its profit centers, it was also putting accounts payable, receivable, sales and delivery functions on-line. Ed Clary moved Haverty's from the old IBM Series 1 platform to what would ultimately become a distributed network of nine AS/400s. "The AS/400 network was key to the whole thing," Mr. Clary pointed out. "We looked at client/server situations, but for the store-to-warehouse link, the stores really had to have on-line access into regional warehouse facilities in real time. After much soul searching, we opted for AS/400s connected with an 11-state data network."

For earlier automation projects, Haverty's had worked with Nick D'Uva, a Compsee regional sales manager in Norcross, Georgia. Compsee had supplied Mars MEQ handheld batch terminals/scanners and Compsee Quicklink wedges for the physical inventory applications at the retail locations. The wedges were interfaced to the scanner/terminals and downloaded in batches to an AS/400. Batch was fine for retail physical inventory, but the data transmission delay would work adversely for the store-to-regional warehouse link.

"Because these [physical inventory] applications were successful, Nick and I got together and talked about the regional facilities project," Mr. Clary said. "Nick was eager to show us sites using RF technology, as the way to meet our real-time requirements. Also we looked at vendor packages ourselves. We set up tests using UHF narrowband and Norand's spread spectrum system, and we got half a second faster in true response time with the spread spectrum. What I mean by true response time is very practical-when I press the enter key, how quickly does the confirmation come back? We chose Norand's spread spectrum, and a year after the facility went into operation, we're still getting subsecond response time on all of our scanning."

Haverty's uses PSC 5312 laser scanners with Norand RT1100 terminals "because we like the internal decoding algorithms better," Mr. Clary explained. "They gave us better depth of field. Compsee's service was great. They would come up at odd hours to solve any problem. For example, the minute I called, they drove up from Troy to replace a burned-out radio transformer, which wasn't even their problem. But they did it to keep the project roll-out on schedule."

The Haverty programming staff completed the system programming, which included receiving, shipping, inventory, accounts payable, and merchandising report generation applications in just five months. The Charlotte regional warehouse prototype system (hooked into the Haverty leased AS/400 network via high-speed lines) went on-line January 7, 1994.

How it Works

"EDI isn't standardized in this industry yet, so when the docking schedule is set, we contact suppliers by phone for a verbal ASN," Ed Clary explained. "As a truck unloads, we apply our own bar coded label and scan every piece of merchandise into the system." Haverty's prints its own labels on a Sato 8400 thermal transfer printer the day before docking, using its own 26-digit Code 128C system.

"We've been trying to work with our suppliers, but there are no real standards yet in this industry. We haven't got to the point where we use the work 'mandate', but it'll come," Mr. Clary said. "Labeling at Haverty's was done only at the retail level before, but now labels are slapped on as items come off trucks."

After unloading, labeling, and scanning, the merchandise is put away. Mr. Clary explained that an inventory locater system is stubbed in-locations are bar coded-but not yet on-line, although it will be soon.

Individual stores place orders electronically through an internal EDI system and the warehouse sends a confirmation. When the goods are pulled for shipment, the bar code label on each piece is scanned as the articles are placed on the truck and an ASN is sent electronically to the store. A manifest is also kicked out and sent along with the load. At the retail site, the merchandise is scanned in with a Compsee light pen and electronically compared with the ASN. Finally, an invoice is sent electronically to the home office accounting system, resident on a AS/400 Model 300.

"All paperwork is now handles electronically," Mr. Clary said. "Before an order was keyed and rekeyed four times. A store placed a PO, keyed it in, and faxed it; the regional warehouse got the fax, keyed it in there as an order, an invoice way keyed as the goods were shipped, and it was keyed in again at the home office. This was enormously labor intensive, not to mention lost of time lags and occasional errors."

He continued, "A lot of things fell in place nicely once we got the system up. Now there's a seamless interface between the home office financials, the regional warehouse, and the retail store's accounts payable. We had the benefits of experienced in-house programmers who knew the business. We were able to take time in the design phase to make the system give us a real competitive advantage."

Gary Niedermeyer, regional warehouse operations manager at the Charlotte facility who helped design the system with Ed Clary, sees added benefits every day. "We've gotten rid of a lot of repetitious paperwork, like order entry, and reassigned some of the office people to scheduling inbound trucks, chasing down late orders, and preparing ASNs. Consequently we can be much more specific as to when and what orders will arrive. Before, we were never sure exactly what [merchandise] was coming in. Our stores now can help preselect merchandise for their trucks and prioritize their orders. This improves their customer serviced, which is a very important aspect of our business. We can prioritize how they load the truck, and even cube the truck ourselves." The system has also helped in inventory control. He added, "We couldn't do cycle counts before. Now we go out with our scanners, and in about eight hours we can do our inventory twice."

"The Charlotte prototype has been so successful," Mr. Clary said, "we rolled out Mississippi a year ago March, and Florida last November. We're currently working on a Just-In-Time distribution that ties the regional warehouse system to our point of sale. We expect to be fully automated-all retail stores and regional warehouses-by the end of 1996. We had the system well designed before we got into it, but the end result far exceeded our expectations."
Reprinted from:
ID Systems
Helmers Publishing, Inc.
April 1995