Beverage distributors today are undergoing the same operational revolution that has swept through numerous retail distribution channels before them.

Facing mounting consolidation in the industry, coupled with an explosion of product proliferation, savvy companies are leveraging increasingly sophisticated IT tools to automate and better manage their supply chain operations from top to bottom. 

“The more SKUs you handle, the harder it is to manage inventory accurately,” observes Chad Collins, vice president of global strategy for HighJump Software, a 3M Company. “And inventory accuracy directly affects your ability to sell products, which has an impact on revenue in addition to influencing inventory carrying costs.” So, gaining better control over inventory is typically the first area beverage distributors focus on when implementing a warehouse management solution (WMS), he points out.

The second area is productivity. By automating tasks within the distribution center (DC) using radio-frequency based warehouse management systems, distributors can ship more cases within a given time frame without adding labor. Not only does this cut costs, but it is becoming a necessity as consolidation pushes companies to drive more volume through fewer DCs.

The savings, customer service improvements and sales growth companies can achieve through a good WMS implementation in inventory management and warehouse throughput is huge.

Conservatively, says Shyam Krishna, vice president of sales for Softeon, a good WMS can provide initial productivity gains of 35 percent or more because it lets companies handle more product and more SKUs more accurately, with fewer people.

A Gift that Keeps Giving
Even after significant gains have been achieved, companies who’ve used WMS technology successfully for a couple of years are discovering that a good system is truly a “gift that keeps on giving.”

Once initial improvements in speed and accuracy have been achieved by simple automation of complex tasks that were previously performed manually—such as entering receiving data into the system—companies are realizing there are other levels of benefits to be gained: taking advantage of the increased real-time visibility that RF-based WMS systems automatically provide into operations; more granular historical data on every aspect of the operation, which they automatically capture; utilizing performance indicators, analytic reports and what-if modeling tools typically incorporated into today’s scalable WMS packages.

Leveraging these capabilities, companies are finding that a WMS can become a powerful engine for driving continuous improvement, not just within the DC, but throughout the enterprise.

M.S. Walker, Inc. (Somerville, Mass., USA) is one company that realized early on the potential of a warehouse system to achieve such transformational results, as it first began implementing HighJump’s Warehouse Advantage almost two years ago.

“We took the installation as an opportunity to reengineer all sorts of behaviors that had grown organically over time in our company, without any strategic foresight,” comments Michael Saitow, CIO of the wine, spirits and tobacco wholesaler/retailer that manages a varied portfolio of 12,000 SKUs. “These involved every aspect of the operation, from how we pick and stage orders to how we handle our inventory and how we deal with vintage-specific items, for example.”

The company set goals and metrics at the start, he notes. “We wanted no overtime and we wanted an ‘on-time, in-full’ order ratio in the high 99 percents.”

Before the system, Saitow says, that metric was averaging only around 83 percent. Within 20 months, M.S. Walker did in fact eliminate warehouse overtime and now achieves an average “on-time, in-full” ratio of 99.6 every day.

For House of LaRose, an Anheuser- Busch distributor based in Brecksville, Ohio, USA, the WMS “created a computer-driven, production-line discipline,” according to vice president of operations Larry Crabbe, that is allowing it to operate at volume and accuracy levels that would otherwise have been utterly impossible, after it combined two separate mid-size DCs into a single, state-of-the-art, 300,000-square-foot “high-rise” operation in 2004.

“On our biggest day out of here we’ve shipped 90,000 cases, with an average error rate of just four or five units,” Crabbe points out.

House of LaRose still works hand-in-hand with its system provider, Softeon, to continually adapt the WMS to its evolving operations. Recently, after using the warehouse management system’s modeling and analytic capabilities to dynamically reconfigure its pick floor and slotting configurations, the wholesaler also installed new gravity-flow racks, which are particularly suited to handling some of its burgeoning lines of new specialty items.

The ability to “see” operations in real time and allocate labor to a variety of interleaved tasks also has enabled House of LaRose to expand its use of bulk routes, helping the company to increase throughput without adding manpower.

“Before we were doing a single bulk route each night. Now we average 10 a day and have the capability for unlimited bulk runs,” points out Dave Mansky, director of sales. The system lets the DC capture orders throughout the day leaving enough time for the night shift to handle more labor-intensive sideload routes.

highjumpsoftware.com
softeon.com

 From Beverage World November 15, 2007