Book distributor gets the paper out

The only paper Keith Shay wants to see in his warehouse is between the covers of the books Ware-Pak Inc. (www.ware-pak.com) receives, stores and ships. Thanks to a warehouse management system (WMS) implementation, Ware-Pak, a third-party distribution and fulfillment company, was able to get rid of its paper-based system, which has lifted some constraints on growth the company may not have known it had.

Ware-Pak's story starts with its concerns over Y2K compliance, but the benefits it has seen from implementing a WMS exceed the immediate goal of avoiding a meltdown six years ago when the calendar switched from 1999 to 2000. Consider the constraints of Ware-Pak's paper-based system and limited information technology (IT) support when it started the change process. It had five clients then. Now it serves 85, including some well-known, big-box retailers. Company president Shay admits that would have been impossible under the old system.

Running a warehouse is tough enough, says Shay, so keeping track of a homegrown system and what developers were doing became a manager's nightmare. With self-deprecating humor, Shay claims, "We're warehouse guys, so we're not very smart." When it came to looking for a WMS, the goals were simple: It had to be best-in-class and largely off-the-shelf. Shay says Ware-Pak wanted a system that would be supported and updated without requiring a lot of Ware-Pak resources. A WMS package from Integrated Warehousing Solutions LLC (www.iws-irms.com) met those qualifications.

With the growth in its client base, Ware-Pak has also seen increasing complexity in the nature of its business. "We ship by the container load," says Shay, "but we also have a lot of less-thantruckload (LTL) loads and a lot of UPS [parcel] shipments."

Publishers using Ware-Pak's distribution center range from those who ship only to retail locations, to those who serve specialized markets like college textbook publishers that might ship directly to students, up to the publishers who are shipping truckloads to major book outlets like Sam's Club, Barnes and Noble and Ingram's, Shay explains. Describing Ware-Pak's mix of large and small and domestic and international shipments, Shay offered this snapshot.

"We have 583 open orders right now," he notes. "Warehouse workers are packing 223 orders, and they've already shipped 142 orders." About 20 minutes later, Shay took another quick view and announced 43 more orders had "left the building," while a steady stream of new orders were being received and released to the warehouse.

Shay admits the operation wasn't very systematic before the WMS implementation. "Everybody had their own way of doing things," he explains. "The system forced the organization into a very disciplined procedural way of doing business and it allows you to do measurements." What kind of measurements, besides the incoming and outbound orders? Shay reports that in the last two years, 90% of all orders left the facility the same day they were received, and 98% of all orders were shipped within 24 hours.

But moving product quickly isn't the whole story. What about product that isn't moving? Shay says Ware-Pak is now able to provide publishers with reports on how many units of a particular title have moved in the last 12 months and, based on that usage and the on-hand stock, it can project how long it will take to sell the current on-hand inventory. Shay points out, "We can have conversations with them like, 'Do you really think it's necessary to have a 20-year supply of this particular title?'"

For most book publishers, distribution is a black hole for their inventory, Shay explains. Most retailers order books on consignment, so publishers have very little visibility on what is selling or even what is still in stock in the warehouse. However, Ware-Pak is now able to provide direct Internet access for publishers so they can see what is in stock. That becomes even more important given the industry practice that retailers can return books they've ordered for any reason. The industry has a 20% to 35% returns rate, says Shay, so there's a large volume of product that moves in the reverse channel as well.

Returns can range from a single book up to a full truckload. The inventory that is coming back is often a mix of titles, and the books can be in any condition, from a complete write-off to "saleable."

With 3 million units of returns per year, there can be a lot of usable inventory coming back from the market. Ware-Pak scans the shipping label on each return and weighs the box as it brings up the customer record. Each book is scanned and evaluated for condition and disposition. Customer credits are issued for the returns and usable stock becomes part of the inventory that is visible to publishers, helping them set production goals and sales strategies.

Every retailer evaluates a publisher based on a variety of factors, Shay notes. One criterion is fill rate. "Because we're a high-volume, rapid-turn facility, we're turning out those orders the same day." Ware-Pak has added a front-end system where it does call center work and has married that system to the WMS. On the other end, it has added a system to provide electronic data interchange (EDI) transmissions.

Despite all the hype about electronic media, says Shay, books are alive and well, and the market seems to be growing. Ware-Pak has been able to grow its position in the market by freeing itself of the constraints of a paper-based system. In adding customers and volume to its business, Ware-Pak has also moved into the global economy. About 60% to 65% of the printed materials Ware-Pak handles come from an overseas location.

With all of this growth and complexity, Shay says his WMS allows Ware-Pak to manage its business much better. "We can move people around because we know where the orders are in-house. We can look at quantities and know how to allocate equipment." From all appearances, Shay will need that flexibility as the book market continues to grow.