Case Study

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

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

"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

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

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

Technologies:
Bar Code, EDI

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.