Technology in the Warehouse

About two years ago, management at Phoenix Big and Tall realized success had caught up with it.

The Alpharetta, GA.-based company, which sells clothing and accessories to big men by catalog, was manually tracking 22,000 SKUs, spread out over 26,000 locations throughout its 70,000 sq. ft. warehouse, with a paper-based locator system. Inevitably, misplaced inventory resulted in backorders and mis-shipments. At this point, management sought a technological solution to its cumbersome problem.

Our primary objective was to eliminate erroneous shipments,� says Curtis Grant, director of marketing and MIS. One big problem was Phoenix�s complex SKU and warehouse location numbers. Its SKU is a 13-digit code that indicates item number, size, and color; and bin locations are a combination of letters and numbers. Inventory moves were written on paper and rekeyed, compounding potential for error.

Re-engineering Operations

Mr. Grant had already decided to use RF equipment. �We need the portability of wireless RF scanners for stock moves from our overstock area to the primary picking area, and for physical inventory. Radio frequency means real-time transactions, which is an important factor with daily stock moves on the floor.�

After re-engineering operations and settling on system parameters, Mr. Grant set out to find a system vendor. He interviewed several and chose a suite of complementary warehouse management offerings from Compsee (Mt. Gilead, N.C.) for integration with existing systems.

"It was easy to show corporate management how operating with about 12% level of misplaced inventory represented potential for lost sales as well as productivity lost to searching for items,� he says. As to payback, Mr. Grant estimated a two-year ROI on the $50,000.00 system, although he now believes the system will have paid for itself in a year.

System installation was a straightforward operation. All required programming on the Hewlett-Packard Unix-based server was written in-house before the system was installed. During installation, a Compsee technician provided setup information for the RF terminals to be programmed by in-house personnel while cabling of the Norand RF gateway server was completed. �The entire installation took about an hour,� says Mr. Grant.

How the System Works

If the product replenishes inventory, the system notifies the operator of the current locations and space availability If the product is being added to an existing location, both product label and existing bin labels are scanned to verify locations. New bin boxes are placed on shelves, the bin box label and shelf location label are scanned and quantities entered, updating on-hand inventories and completing the receiving process.

Order fulfillment is initiated when orders are credit card authorized and released in batches to the warehouse as printed pick tickets, each with a unique bar coded serial number and a bar coded shipping label that includes order number, method of shipment, and other information. Orders are picked, and as they are packed, a bar code label on each item is scanned with PSC 5385 scanners at one of six stations.

Once the system confirms the completed shipment, the carton is sealed and the shipping label applied. Sealed cartons move to a scale and manifest system where the shipping label is scanned again, posting the shipment to the appropriate carrier. Temporary files created by the manifest system are used to automatically adjust credit card billing to include applicable shipping charges. All orders are shipped within 24 hours of receipt, and orders entered before 2 p.m. ship the same day. (Phoenix Big and Tall ships 600 orders daily, 1300 during peak season.)

Benefits

Phoenix Big and Tall was also able to move toward eliminating its biannual physical inventory. �Typically, physical inventories were done over three days, including weekends at time-and-a-half and double-time rates. With the RF scanners, we�ve cut the time and work force both by over 50% representing an actual reduction in overall costs of 64%.�

Phoenix Big and Tall�s automated warehouse management has dramatically improved all areas of operations �resulting in faster service, better space utilization, and fewer returns,� says Mr. Grant. �Cost cutting was secondary, but we�ve realized substantial savings. The technology allows us to adjust staffing levels more cost-effectively for seasonal fluctuations. During peak business periods, the company can quickly increase staff, using less skilled labor, without incurring significant training expenses. And discontinuing physical inventory will move system pay-back to the one -year mark, instead of the anticipated two years.�

Reprinted from:

Operations & Fulfillment Magazine
Target Communications Corporation
November/December 1996