Improving Distribution Efficiency

Jan. 1, 2003
Everyone wants to improve customer service and reduce operating costs. For State Service Systems Inc., a division of Beauty Alliance of Clearwater, Florida,

Everyone wants to improve customer service and reduce operating costs. For State Service Systems Inc., a division of Beauty Alliance of Clearwater, Florida, to meet this goal, management needed to control packing material costs and documentation proliferation.

The distribution facility has 114,000 square feet of warehouse space and employs a staff of 85. Inventory consists of more than 14,000 products that vary in size and shape. Product lines include Matrix, Redken, Farouk Systems, Joico, ARTec, Creative Nail Design, OPI and Supre.

These products are shipped to more than 240 independent distributors and company-owned locations weekly; more than 150,000 corrugated boxes go out monthly.

However, corrugated boxes, tape and bubble wrap were draining the company’s operating budget. Packing slips alone ran as many as 90 pages for each shipment, making it almost impossible for customers to determine which boxes contained high-traffic or critical items. This paper proliferation also made it hard to track damage and theft losses.

To help streamline the systems, managers contacted Monoflo International Inc., a manufacturer of reusable plastic container systems.

One decision was to move from corrugated boxes to plastic reusable distribution containers. This change was key to reducing overall operating costs. Because of the varying array of product, managers chose the DC2515-14 distribution container. Fifty containers were sent for testing in State’s system.

These heavy-duty 100 percent Virgin HDPE plastic containers had the strength to endure harsh conditions. The height is greater than conventional containers, enabling them to hold taller shampoo-type bottles in an upright position. The added width allowed full cases of product to be dropped into the tote when “break-packing” wasn’t necessary. The containers cube out on a 40-inch by 48-inch pallet for easy shipping.

To reduce losses from theft, Tote Snaps were put on all shipments. This rivet-type snap seals the containers through the tie hole and makes the containers tamper evident. This seal provides both the trucking company and the receiver a quick guarantee that the shipment is intact. Although cable ties offer the same security at a lower cost, the easier-to-use “Snaps” allowed State to increase its daily orders and save on labor costs.

Once State Service established the container system, it implemented a quality verification system by establishing a database of all 14,000 of its products by weight. Now, the company can verify the accuracy of each order by simply weighing the fully packed container. This system eliminated shortage complaints. Currently, there is 98 percent order accuracy, with a goal of 99.7 percent or better once the project is complete.

A new program issues a separate packing list for each container. This gives customers immediate access to out-of-stock items so they can get them back on the shelves quickly.

Each packing list also indicates the number of containers the customer received for faster return to State Services.

Initially, the company bought 20,000 containers. This quantity would work with an estimated 21-day turnaround. With eager customer participation and a return-shipping label provided by State Service, the turnaround time was reduced to 14 days on average. The trucking firms found room on driver returns without sacrificing valuable floor space, making the return cost-free for State. Turnpike Transit, one of the preferred trucking partners, admits that the ease for drivers to load, unload and verify shipment accuracy far outweighs any costs involved in returning the totes.

The actual return on investment was met in less than six months. The program reduced packaging costs by $130,000 and labor costs by $100,000 in the first year.

Monoflo International Inc., 800-446-6693.