Sizing Up The Supply Chain

We've all heard that if something ain't broke, don't fix it. This is a fine philosophy when you are evaluating a home microwave that takes 6 minutes instead of 2.5 minutes to make popcorn or an exhaust-spitting car that passes inspection. But, certain things cannot wait. When it comes time for retailers to assess the processes and infrastructures that support their billion-dollar companies, the decision to not fix supply chain inefficiencies could leave them broke in another sense of the word.

Goody's Family Clothing sized up the links of its supply chain in 2000 when it determined that its Knoxville, TN, distribution center (DC) could not sustain the apparel retailer's westward expansion. To position itself for growth, Goody's built an additional DC in Russellville, AR, in January 2001. It wasn't that the 10-year-old Knoxville facility was dysfunctional. It was getting the job done and still is, but Goody's IT staff knew things could be better. It understood that newer hardware and software systems were a must. More importantly, it recognized that a change in software might necessitate a change in processes as well. "In some instances, it made more sense to modify our supply chain procedures for the new building rather than to modify the new software to fit the way we were already operating," said Michael Bryant, VP of distribution and logistics at Goody's. In fact, the Russellville DC model has proven so successful for the retailer that it plans to convert its older facility to match the newer one beginning in 2002.

Out With The Old When Building Anew
According to its IT staff, Goody's does not operate warehouses - which implies stockpiles of inventory - it prefers distribution centers. Once a trailer arrives at the retailer's doors, merchandise flows through its facilities in two days on average. This "just-in-time" model eliminates the need to maintain inventory at the DC level. Goody's Knoxville facility services about 2/3 of the chain's 330 stores in a DC that is about 40% larger than the new one in Russellville. Since the majority of Goody's merchandise is still being received, processed, and shipped through its older facility, the retailer will look to its Russellville DC next year as a working prototype for change. The goal was to maintain the productive aspects of Knoxville and determine which areas could be improved.

For example, Goody's did not attempt to duplicate its legacy WMS (warehouse management system) in Russellville; instead, the retailer installed a new system from Retek. One module of the Retek system allows vendors to call in or send ASNs (advance ship notices) indicating what they will ship and when they will ship it. The system then compares the advance ship information against the stores' POs (purchase orders) and designs the carton flow for the merchandise accordingly. The WMS, in conjunction with Goody's merchandise replenishment and allocation software called MMS (a product acquired by STS Systems in 1997), enables Russellville to pass advanced ship information to its conveyor and sortation systems. Both facilities are aware of incoming merchandise, but in Knoxville the allocation system has no way of automatically transmitting the data. "Russellville takes ASNs to a whole new level. When the trailer hits the back door, we know exactly where the merchandise is supposed to go," said Jay Scussel, senior VP of MIS at Goody's.

The advantage Russellville has over its elder is an additional software layer - the WCS (Warehouse Control System), translator software from Real Time Integration, Inc. (Melbourne, FL). "The functionality of the DC is being controlled by the WMS, but the physical operation of the building is under the control of the WCS," Scussel said. The WCS could be thought of as a traffic cop, patrolling the communication between the allocation system, the WMS, the conveyors, and the sortation devices. It tracks cartons through the building, and as they reach specific points, it consults with the WMS for direction. Based on bar codes scanned on receipt and throughout the facility, the system knows when to divert a carton to the correct processing area and eventually to the correct store. "If we didn't have the WCS, we would be manually routing cartons through the facility, like we do in Knoxville, by pushing a series of buttons on a conveyor line," Scussel said.

Bar Code Compliance Makes A Sizable Difference
The WCS provides communication links in Russellville that are lacking in Knoxville. In the older facility, DC employees must manually bridge this gap. With handheld bar code scanners, they scan manufacturer-printed bar codes to indicate that the product was received. But the conveyor and sortation systems cannot route the carton to the correct processing areas unless the employee prints and applies a second bar code label to each carton. This new label indicates the carton's final store destination. Not only is this a redundant procedure, it also does not allow the conveyors to separate a carton from its larger order. An entire order, which could contain hundreds of cartons, has to move to the same area to be processed; so if one carton needs to go to the flat sorter, they all must go.

Russellville solves this problem by using UCC (Uniform Code Council) 128 bar code symbology throughout its facility. The bar-coded information matches that of many manufactures as well as coordinates with the information delivered in POs and ASNs. If Russellville receives 10 cartons that contain 6 bundles of jeans in each, the allocation system might indicate that some stores expect 3 bundles of jeans, while others expect 6 bundles. In this case, Russellville is able to immediately divert the full cartons to shipping. In Knoxville, all cartons would go to the flat sorter and would drop the designated number of jeans for each of the stores into the appropriate boxes. "Russellville doesn't have to break a carton apart just to put it back together again," Scussel said.

It also means that in Russellville, not all of the cartons contained in a specific order have to be released from receiving simultaneously. Each carton has its own identity allowing merchandise to flow through the facility in any sequence. "Using the UCC 128 bar codes effectively takes that shipment from a PO level down to an individual carton level and creates a more free-flowing system," Bryant said.

If The Shoe Fits Build A Matching Pair
The entire Russellville project required extensive research and collaboration among Goody's employees and its software and hardware vendors to determine how the pieces would work together. "We were able to determine, through design sessions, not only what the software needed to do, but also how it would physically work inside the building. We designed a total package all at once, which was a real advantage," Bryant said. Goody's IT staff was able to complete much of the integration itself, but it was also important for the vendors to work together to complete the project.

The retailer plans to begin upgrades to the Knoxville facility in 2002. Although the company has not quantified the Russellville project's success, Goody's is confident that the new facility is efficient enough to merit the Knoxville conversion. "This first year, we needed to concentrate on developing and proving our methods, before we start to analyze the numbers," Bryant said. "I don't see a lot of value in conducting ROI analysis until we have completed a full year of operation. We are still teaching and modifying our best methods and practices." Once the Knoxville center is updated, Goody's will step back and evaluate another area of its operation, perhaps Internet-based EDI (electronic data interchange). But regardless of the next IT initiative, the company will continue to look for ways to improve by bringing seemingly overwhelming IT projects down to size.