In the world of high-volume retail, the worst-case scenario is an empty shelf. For the top 100 retailers, stock outs amount to a $69 billion annual headache — that's how much the industry believes it's in the red every year due to lost sales opportunities.
For Office Depot Inc., one of those top retailers, maintaining a competitive edge means being able to quickly move product from its suppliers to end customers. Part of the reason for the company's success is its incorporation of wireless technology in highly automated distribution facilities.
Office Depot operates 22 customer service centers, from which it delivers overnight to customers that place orders through the Internet, on proprietary-web sites, via call centers or in the retail stores, explains Dennis Andruskiewicz, Office Depot's senior vice president, supply chain logistics. The company has another network of 10 facilities it uses for its store network. With annual sales of $13 billion, Office Depot has more than 1,000 retail stores across the country.
The majority of freight Office Depot ships to its stores is cross-docked. "Those 10 buildings are empty warehouses in the morning and empty warehouses at night," claims Andruskiewicz. "We flow product in from vendors — with some proprietary code that reallocates it based on the most current inventory position and demand at the stores. Then we flow product out and deliver it next day to the stores."
Warehousing operations for the company all utilize radio frequency (RF) in which it scans receipts, putaways, bulk picks, replenishments and loadings, among other functions. The last piece needed was for its pick operations.
"In our picks, we weren't using any RF type of equipment," says Kevin Conklin, Office Depot's senior director of operations. "We knew scanners weren't going to be the answer for us and had to make a choice between using pick-to-light and pick-to voice." The choice was a wireless voice solution from Vocollect Inc.
Andruskiewicz notes that Office Depot began its pick-to-voice pilot using Vocollect a few years ago. Not only has it helped meet ROI projections by increasing productivity — which was the original justification for the purchase — it also has increased the company's already high internal pick accuracy.
To maintain its extremely high velocity, Office Depot uses high-end material handling equipment and systems. "A little over half of our locations are automated to different degrees," explains Conklin. "Utilizing a voice solution played in perfectly with what we were able to do. We've also determined that using voice recognition software doesn't need to be done only in an automated location. We are in the process of rolling out into what we call our manual push-pull locations and it's working just as well there."
Both Andruskiewicz and Conklin note that training new personnel takes just 45 minutes to an hour, a big plus over older picking methods. There are other advantages possible, as well. "We talk a lot about pick-to-voice," says Andruskiewicz, "but feel the technology lends itself to other areas and transactions within the warehouse — things like receiving, handling and returns."
Increasingly specific customer demands led FMI International to a wireless solution that also provides visibility into the inventory it handles for its customers. FMI is a third-party logistics (3PL) provider that primarily serves the fashion and retail industries.
Most of the apparel destined for FMI customers is imported from China and moves to FMI facilities located close to ports in California (1.5 million square feet), Florida (200,000 square feet), New Jersey (350,000 square feet) and at New York's JFK International (50,000 square feet). With West Coast ports experiencing backups, the company has seen an increase of as much as 25% in shipments moving through all water routes to Eastern ports.
As FMI receives a delivery order on a given shipment, it begins to track it with its proprietary system. The 3PL picks up shipments at the ports, often bringing containers to its facilities where they are unloaded, consolidated for shipment to a retailer, sent to a distribution center (DC), or putaway in its warehouse.
FMI deals with major clothing retailers, monitoring their inventory and moving specific orders to retailers including Wal-Mart Stores Inc., Target Corp. and Kmart. Although the 3PL ships carton goods, "as retailers get more specific as to what they want to have in stock — only certain sizes and styles — we have to be able to meet those requirements," explains Paul Gadis, FMI's senior vice president of information technology.
FMI implemented its own warehouse management system more than 20 years ago. "We have to be ultimately flexible because we have so many different customers and every one of them places different requirements on us," notes Gadis. "In order to do so, we decided to stick with our own WMS and it's worked out pretty well."
Previously FMI had used paper in its pick and pack operations, which created some issues with accuracy of orders. To meet increased order fulfillment requirements, the company began using wireless scanners throughout its Windowsbased network to scan and pack with greater accuracy.
FMI now has wireless terminals, developed by Hand Held Products, on all of its forklifts. "Everything that's putaway and pulled out is done by our forklift drivers — they're now terminal operators," explains Gadis.
At present FMI has about 20 wireless scanners in use, particularly in its Miami warehouse, which moves a few thousand cartons each day. Because of the speed and accuracy achievable with the devices, the 3PL anticipates eventually having as many as 60 to 80 scanners throughout its facilities to keep up with the increasing needs of its customers.
To provide better service, FMI is able to establish EDI (electronic data interchange) communications with a given customer. Once the 3PL electronically receives a shipping order (a pick ticket) from the customer, it's uploaded into FMI's system, Gadis says. FMI then uses a home-grown software solution customized to run on the wireless devices.
"This allows the user to scan a special label we print that contains the order number," Gadis continues. "It then populates the wireless device with all items on that list. Pickers scan the items one at a time into a carton until the carton is complete."
For one customer, Kids International, FMI received a commendation from Wal-Mart as being one of the most accurate providers of merchandise ordered as
Learn more about wireless at www.logisticstoday.com/wireless.
SKU level items. "We got a very high mark," says Gadis. "But that's the result of the technology, equipment and efforts of all involved." LT