Cancer Society Cures Inventory Clog
Installinga WMS system helped this non-profit organization streamline its fulfillmentprocesses and cut $8 million out of its operating costs.
by LeslieLangnau, senior technical editor
"Whatcan we do to operate in a more business-like manner?" Even non-profitorganizations find themselves under pressure to cut costs and find new revenuesources. Nelson Rivera, managing director, supply chain management, and BillCosta, director of logistics for the American Cancer Society (ACS), began byreviewing the practices of many for-profit companies. Even though a number ofthese for-profits did not offer much in the way of best practices, Rivera andCosta saw enough of what to do and what not to do to develop a plan. The lessonsthey learned apply to non-profit organizations as well as investor-ownedcompanies.
Tenmonths after they began equipment implementation, the material handling anddistribution operations were transformed from a decentralized, manual operationinto a world-class automated centralized fulfillment system. The transformationwent so well that the ACS Nationwide Distribution Center has extra capacity.The center may potentially offer its fulfillment services to other non-profitagencies, turning this extra capacity into a revenue stream.
TheNational Home Office is responsible for planning and coordinating public andprofessional educational material. Before the transformation, many of thebrochures, posters, pamphlets and other material were stored in a 50,000-square-footbuilding in Atlanta. Each of 52 divisions replenished its material from thissite, plus it stored material created for its local programs and specificlanguage or culture needs. Most of the divisions housed up to 100 SKUs ofliterature, some of which were decades old.
Becauseof the manual fulfillment methods, shipments to the divisions were usually inbulk quantities, and order cycle time could take up to six weeks. Storageorganization was poor, inventory information was incomplete and inaccurate, andthere were no measurement systems in place to gauge productivity.
Becoming more businesslike
Riveraand Costa hired the St. Onge Co. as their logistics consultant and systemintegrator. The reorganization game plan they all developed resulted in:
•Turning the existing distribution center in Atlanta into a centralizedfulfillment facility.
•Reducing order cycle time to five business days.
•Eliminating the need for additional storage locations throughout theorganization and reducing obsolescence.
•Centralizing fulfillment operations, allowing the center to negotiate highercarrier discount rates.
Part ofthe ACS transformation involved arranging storage and warehouse space moreefficiently, often by going up. Shelves reach 20 feet high in many cases.
Some ofthe material handling equipment already in use stayed. These pieces includedstorage racks, a stand-up lift truck for receiving, a sit-down lift truck andsome of the old processing cables. However, a lot of new material handlingequipment was added. Rivera and Costa knew what they wanted to accomplish, andthey convinced the ACS board to allocate the necessary funds.
"Thenew equipment we purchased primarily from local vendors," said Rivera."This consisted of vertical lift carousels, conveyors, warehousemanagement system [WMS], radio frequency bar coding devices, automatic put-awaysystems, two- and three-deep push-back racks, gravity flow racks and staticshelving."
"Wecombined the infrequently requested material from multiple aisles into one verynarrow aisle," said Costa, "and we use a cherrypicker to retrieveit."
It'sthe warehouse management system, however, that's been key to the center'stransformation. "Three years ago, we didn't have computers in thewarehouse," said Costa. "We had a dummy terminal that was hooked upto our financial system where we would keypunch our orders to generate the picktickets.
"Ourwarehouse management system is so dynamic, it knows our inventory and when weneed to replenish," continued Costa. "Our orders are all bar coded.We can batch pick, filling up to 20 orders simultaneously.
SaidDoug Ross, product director, Manhattan Associates, "So far, this is thefirst non-profit installation for LogisticsPro WMS software." St. Ongeconsultants evaluated several WMS packages, but the costs and features ofLogisticsPro satisfied the ACS requirements best.
"We'realways budget and commitment conscious," said Kellie Jo Barr, accountmanager, Manhattan Associates. "Sometimes these factors are just a bitmore sensitive to non-profit organizations."
The newsystem is paperless. More than 90 percent of orders now come in on-line, with afew faxed in. Once an order is received, delivery takes just three days onaverage. The center has a customer service agreement with all the field unitsto deliver within five business days.
“Beforethe implementation, we were handling 12,000 to 15,000 orders byhand,” said Costa.“Last year, we did 92,000 orders, almost an 800 percent increase. Much ofthis is because of the features that LogisticsPro provides us.”
At thefield offices, the online ordering system requires employees to provide adelivery date. The traffic module then schedules the carrier and factors inshipment time to meet that date. Then the WMS software sends this informationto Costa, who has the final say in delivery priorities.
Oncethe allocation plan is run, the WMS software requires all packages to be cubedand weighed, which is handled by the CubiScan system from Quantronix.
Allorders are shipped in one of five case sizes, based on the cube and weightinformation. The WMS prints out a label that gives the picker the appropriatecase size for the order.
Putting it together
Whenevera new system is installed, it affects the flow of product. Even without a WMS,there's considerable change to deal with. "You're getting rid of oldbottlenecks and sometimes creating new ones," added Barr. "It'scrucial to consider how all the components, including the WMS software, willchange your business; as well as the work flow and product flow in thebuilding. Teamwork is paramount."
"Nelsonand I, representatives from each supplier and the St. Onge consultants allformed a team for design and implementation," added Costa. "To workout solutions to installation, integration and system design issues, we heldmeetings, in some cases every day, and they would last as long as necessary,all day if needed, to solve the problem."
Theoverriding factor at this site was that all team members were highly committedto the goal of a successful installation.
"Atsome point in the project, you, as the client, must recognize that you havesufficient education and knowledge to take full ownership of it," saidRivera. "Your vendors may develop as much enthusiasm and passion for theproject as you have, and strongly suggest solutions that might be contrary toyour goals and needs. It's up to you, then, to draw the line and take control.You may even have to resort to extreme measures, like threaten to pull the plugand re-install the old system to drive the point home that you're notkidding."
Butonce you've established ownership, you'll find that your consultants andintegrators consider the installation a success.
"Oneof the ways we meet our delivery commitments with the number of people we haveis by cross-training them every 30 days," says Costa. "That'ssomething I brought from my military background. It increases the employee'svalue, to him or herself as well as to you, because it enables you to keep yourstaff small.”
"It'simportant to educate your staff," adds Rivera. "Train them in everyarea of the center so they can shift their responsibility based on the currentdemands. Cross-training is also a great morale booster."
Part ofthe training involved introducing the field staff to the new order entrysystem. "Some workers had never used a computer before," said Costa."But the software was easy to learn, and once they understood it, theyembraced the system."
Learningthe ins and outs of LogisticsPro began with Manhattan Associates team memberseducating the project team on the business decisions that needed to be made andhow these would affect the software. The team learned how to configure thesoftware to match how they wanted the warehouse to run. Then, that group servedas trainers to the company.
"Insome cases, technology eliminated existing tasks," said Rivera, "butmost of the time the workers were thrilled about that because it allowed themto focus on new assignments and learn new skills."
Tenmonths. That's what it took to install the equipment; train people in the fieldunits; clean out, consolidate, and accurately count inventory, and move about500 SKUs of material from field offices to the distribution center.
Everyone,including Rivera and Costa, worked many hours on the project, often seven daysa week. Even family members volunteered to work.
"Now,"said Costa, "we get product to the customer more than twice as fast as weused to. We ship 1,200 to 1,500 parcels a day in one shift, five days aweek."
Paybackwas in two months, and the revamped distribution center saved the ACS $8million in the first year.
"Thisapplication is on our list of user site visits," said Tom Mulheron,account manager, Manhattan Associates. "The organization, how ACS doesbusiness, how it put together procedures and follows them to the letter; it'salmost military precision. Costa runs a very tight ship."
"It'sa fine example of a mid-size warehouse using lots of different forms ofmaterial handling equipment, controlled by software, and having it all run verysmoothly," noted Ross. "We agree with Costa, there's no reason whyother warehouses can't run as efficiently." MHM
A Closer Look
Thefollowing vendors supplied this equipment for the ACS distribution center:
•Carolina Handling, conveyors;
•Raymond, lift trucks;
•Sealed Air, dunnage;
•3M, box sealers;
•Mathews Conveyor, conveyors;
•Manhattan Associates, Logistics Pro WMS;
•Teklogix, RF bar coding equipment;
•Logmatix, bar code labels;
•Quantronix, CubiScan software and equipment;
•Remstar, vertical lift modules;
•Atlanta Storage, gravity flow racks;
•The St Onge Co., consultants.