Accessories Company Sees Bar Code Benefits Exceed Expectations

By D'Anne Hotchkiss

When Montaage was founded in 1988, the Texas-based company sold a limited but stylish line of decorative home accessories to interior designers and furniture stores. Today, this industry leader, which also owns Park Avenue Lamps, serves 3,500 customers worldwide and inventories some 1,500 different products. The company's hand-crafted mirrors, mosaic tables, clay urns, wood-carved items, and lamps are in demand by such high-end home furnishings stores as Ethan Allen, Sears, Home Life, Gabberts, and Havertys.

On an average week, Montaage employees process four in-coming full-trailer shipments—about 600 cases per truck—and they fill 200 orders amounting to three-and-a-half out-bound trailers. Not surprisingly, keeping records manually for receiving, stocking, and shipping orders was fraught with problems. It was inefficient and difficult to maintain a desirable accuracy rate.

"We knew if we wanted to grow and stay competitive, we needed to automate our record-keeping system, and bar code scanning seemed the logical solution," says Darren Dunn, operations manager.

Move Provides Opportunity

In July 1998, Montaage moved into its new 100,000-square-foot distribution center in Dallas, and began the process of converting inventory and picking functions from manual to automated processes utilizing bar codes. Since then, Montaage has realized labor savings and a 25 percent improvement in accuracy in tracking its 15,000 plus warehouse items.

Automation was part of Montaage's 10-year plan to grow the corporation, says Dunn. The company was careful to select a data collection system that wasn't over-engineered. The new batch solution uses hand-held data collection terminals, a solution that was easier to implement and cost less than one integrating real-time data communications. The system also requires less on-going technical support. Information in the hand-helds is uploaded periodically during the day over a communications cable to a Pentium personal computer. Information is then sent to the company's server, where it is integrated with the warehousing software from Data Solve. For help in planning the changeover, Montaage turned to Steve Bryant of Dynascan, a Plano, Texas-based bar code systems company, to handle the implementation.

Bar Codes More Precise

"Montaage has part numbers with eight to 12 digits. It's easy to transpose them when you're doing inventory or picking products for shipment. Mistakes cost money. Using bar codes practically eliminates human error. Electronic scanners read numbers precisely every time," explains Bryant.

Bar codes, those familiar series of vertical black bars printed in varying widths and patterns and found on everything from fruit juice cartons to jet engines, can represent any combination of letters and numbers. When read by a scanner, the bar code quickly and accurately identifies the product on which it appears. The information can be stored and transferred in an electronic format.

To collect the information, Montaage chose Apex II portable data collection terminals with integrated bar code scanners from Compsee, in Mt. Gilead, NC. To process the information, the company selected custom warehouse management software from Data Solve, a Dallas-area company.

"The Apex II units are easy to use and they allowed us to integrate our bar codes and in-house programming system without a lot of costly, complicated programming," says Dunn.

Dynascan created a program for the hand-held terminals that integrates with Montaage's existing warehouse management software. When the new accessories arrive at the distribution center, a bar code label is affixed to each item.

The receiving employee puts his hand-held scanner into the receiving mode and reads the bar code; information from the bar code is retained in the scanner. After scanning all the codes, the information is uploaded to the main computer system, which then shows that the merchandise has been received.

Next, the merchandise is transferred into the racks or bins and each item is scanned again in its warehouse location with its rack number. This information is uploaded into the same warehouse management system. The computer now knows exactly where these items are located. Similarly, bar codes are scanned to track merchandise during picking and packing.

Four-Phase Plan

The changeover to bar coding went smoothly, Dunn notes, because it was planned in conjunction with the move to the new facility. To incorporate scanning in the operation, Dunn and his staff developed a four-phase plan.

"he move was an ideal opportunity to make the changeover. As we moved stock from our old facility into our new warehouse and took receipt of new items, we applied the bar codes. That was phase one," Dunn says. During the second phase, bar codes were applied to the entire new bin locations for put-away. This allowed employees to scan items from the old building into the new facility storage racks more quickly. Originally, Dunn projected this phase would take four days, but it was completed in less than three.

The company has reaped additional timesavings in phase three, the cycle count. "Previously, we needed three people to do the cycle count and we did inventory annually. Now, one person scans all the items in our inventory quarterly to ensure accuracy," Dunn says.

The cycle counter simply uploads data into the computer system using an Apex II unit. "He can then print out audit lists to compare our scanning with the actual inventory locations in the computer," Dunn explains. This procedure not only reduced Montaage's labor costs, but also reconciles physical inventory with book inventory and confirms product is in the proper locations.

Montaage plans to implement the fourth and final phase this spring— picking, packing, and sending orders out the door. "Speed and accuracy are especially important in the picking and packing process because our customers don't like surprises," Dunn says.

Customers Approve

Efficiency and customer service have also improved because of the automated inventory system, Dunn notes, "Before we used bar codes, it would have taken us two days to receive and ship an order. Now, we can receive a shipment from one of our suppliers in the morning and ship it out to a customer that afternoon." A recent questionnaire sent to customers showed positive response to the faster service.

Montaage is an excellent example of the benefits that can be realized when companies understand their true needs, notes Byrant. Montaage is utilizing computer technology for greater operating efficiencies and accuracy without having to purchase costly or overly sophisticated systems and programs.

Montaage originally budgeted $30,000 to implement the four-phase scanning program. Signification reduction of shipping errors has offset about half of the actual expenditures to date. "Industry calculations put the cost to correct a single shipping error at about $40," Bryant says. "Since there's about a five percent error rate, it's easy to see how these savings alone assure a quick payback."

Positioned for Growth

Dunn expects his firm to complete the second part of phase four—stock replenishment—by May.

"We are very pleased with the results so far," he says. "Bar code scanning technology has undoubtedly helped us improve our productivity, efficiency and profitability. We foresee other possible applications, too—like asset identification and tracking. Its benefits have exceeded our expectations. In many ways, bar codes play an important role in helping position Montaage for future growth.".

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