Cutting Costs With Cutting-Edge WMS

April 1, 2005
Moving from a paper-based inventory management system to an automated warehouse management system might seem like stepping from the dark into the light. Though this system operates in the dark, things are looking much brighter.

Apparently the adage, if you want to hide an elephant the best place to put it is in a herd of elephants, applies as well to automobile and truck tires. Del-Nat Tire Corporation (Memphis) handles about 2,000 stock keeping units (SKUs) and ships an estimated 70,000 tires per day from its huge distribution complex in Memphis. "We deal with a product that looks basically the same, yet differs in subtleties important enough to draw the attention of the federal government if things aren't labeled properly," says Glen Tosco, manager, information technology. The subtleties he's referring to are things like age, tread designs, tire plies and other information on the sidewalls of tires. And all the products are as black as tires.

Del-Nat had an inventory control problem similar to many companies, with a unique spin to it. "Like a lot of companies, we had a challenge keeping track of our inventory," says Tosco. " However, finding lost tires in a warehouse that encompasses 500,000 square feet is not easy. If five tires go missing, they're gone!"

The company solved its inventory control problem and became more productive when it installed a warehouse management system from Radio Beacon (Toronto).

The problem
About half the tires arriving at the Del-Nat warehouse complex are identified with a bar code label. Labels are generated for tires not marked before they are stacked in special carriers and moved into racks. Although every tire carries a unique bar code label, in the rush of manually fulfilling orders, it was possible for order selectors to set a tire aside, then put it back on the wrong stack. Unless a worker was extra careful, the wrong tire might be selected. Or, a request would come up short even though inventory records indicated the tire was in the building. In spite of adequate lighting, searching for an all-black item in aisles sandwiched between 30-foot-high racks of tires, could defy even the sharpest-eyed order picker.

The solution
Choosing the right warehouse management program (WMS) is a major decision for companies, not just in terms of money, says Dale Jefferies, president, Radio Beacon. The company worries how such a move will change its business.

"We explain," says Jefferies, "that adding a WMS will not revolutionize a company's business. We're just giving them new tools to do the job better."

He adds that for a company to be comfortable with a WMS package, it has to know there won't be major things to learn while ramping up to speed. Getting product out the door always has to be at the top of its to-do list.

"After a user company gets comfortable with the new program," adds Jefferies, "we show them how to change their processes to get more benefits from that program. We tell them we're going to do what they're already doing—just better."

Most of the time a company has a specific pain-point they are trying to deal with. "We knew what we needed and what we wanted in a WMS," says Tosco. "We needed a system we could grow into over the next 10 years, not one that we'd grow out of in three or four."

Another thing important to Del-Nat about a WMS was that the program integrates with its ERP program, Microsoft's Great Plains.

"With this system," explains Tosco, "we key an order into the ERP and it drops that order right to the warehouse floor for picking and shipping. When the order is picked, shipping is acknowledged and the order is automatically invoiced to the customer."

Order selectors now use hand-held bar code label scanners to check each rack location and each tire they pick. Instructions on the scanner's screen tell the order picker which of 68 dock doors will be used for this order. Tires are dropped in a loading queue and scanned again as they are loaded in the trailer.

Everybody benefits
Installing the Radio Beacon WMS has improved business for Del-Nat and its customers. Shipping discrepancies have dropped dramatically, says Tosco. "Another thing we've been able to achieve for customers, is to keep [on the invoice] all of the car tires and all of the truck tires together."

Previously, the person checking the order had to know the product and SKU numbers to determine what units were car tires and truck tires on the list, since units are randomly picked and loaded into the trailer.

Because of size and weight, shipping tires is unlike shipping most other products. Del-Nat ships in trailer-load quantities only. Since its customers are aware of sales patterns and promotions, they try to plan as far ahead as possible. For example, a customer might submit 10 orders before it reaches the trailer-load shipping threshold established by Del-Nat.

The size, or cube of an order can only be an approximate dimension because of a tire's configuration. And it's also possible for a customer to use its own trailer to pick up an order, adding another element to the equation. Solving these challenges meant inventing new shipping processes within the WMS. For example, orders are configured into multiple deliveries, on the fly if need be. Knowing the approximate size of the tire, based on SKU, is only part of the challenge to filling a trailer. "Tires are still handled and loaded manually," says Tosco. "When they're floorloaded, tires have to be laid flat and laced, each one partly inside the one next to it. They can't be stacked."

Tosco says most of its customers know what it takes to hit the right quantity of tires to fill a trailer. To do so, "We have what we call 'load-last' orders," he says. "The customer will order maybe 200 of an SKU he knows is a fast seller that we can load last on the trailer if there is room that needs to be filled to get the trailer on the road."

And if the order more than fills the trailer, it's split, or cut at the point where the trailer is full. The remaining tires are viewed by the WMS as another order from that customer. Del-Nat's system then begins to build from that point to grow the customer's next order to YHE required shipping size. These are the kinds of decisions that are now done by the WMS, often during the loading process.

Using an e-commerce portal on its Web site, Del-Nat provides customers with an almost immediate snapshot of orders. "Customers can see their invoice as soon as the trailer pulls away from the dock," says Tosco. "That way they know what will be arriving at their dock in the next day or two."

Along with reaching new levels of accuracy, Tosco says the company's made great strides in productivity. "We've reduced overall expenses and reduced one whole shift, plus six people from two other shifts," he says. "We run about 20 hours per day now and move more tires out the door."

Tosco notes, initially the company anticipated a return on investment of the WMS would be about four and half years. To everyone's satisfaction, the system paid for itself in about four months.

If searching for a WMS, Tosco recommends flexibility in the program and stability in the vendor. "We wanted our program to grow with our business and we wanted a vendor who would be there and willing to change its product as it moved along with us," he says.

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