Genesco Boxes Out DC Dilemmas

Fred Flintstone relied on foot power to propel his stone-wheeled convertible to a long day at the Slate Rock & Gravel quarry. On another channel, George Jetson's rocket-fueled space buggy handled the daily commute to and from a three-hour workday at Spacely's Space Sprockets. In either case, both animated men got to their places of employment and put in full workdays. George just had the benefit of technology that made his day more efficient.

DC workers at Genesco (Nashville, TN) aren't working three-hour days, and they drive cars just like yours and mine to work. But Wesley Lankford, manager of warehouse systems at the company, says its recent DC construction project and supply chain improvements were a bit like going from the Flintstones to the Jetsons. Genesco sells footwear and accessories in more than 1,000 retail stores in the United States, principally under the names Journeys, Journeys Kidz, Johnston & Murphy, Jarman, and Underground Station. The company also sells footwear online at www.journeys.com and www.johnstonmurphy.com, and sells it wholesale under the Johnston & Murphy and Dockers brands, which it licenses.

Outdated DCs, Outdated DC Systems
Even with all of these brands and distribution channels, as little as two years ago the company was operating a manual, paper-based distribution system in three separate DC facilities. Receiving and distribution activities at each building were recorded on paper and keyed into the company's mainframe at the end of the day. "Genesco stuck with a manual process of distribution way beyond its time," admits Lankford, who was a harbinger of improved DC management there. "The company tried to solve all of its problems by throwing more manpower at them. If it was falling behind, it added more manpower. In a slow season, it took manpower away. Manpower was the only variable." But in supply chains, as in cars made of wooden beams and rock wheels, adding more manpower has its limits. Regardless of DC employment, the company knew it wouldn't be able to handle the volumes necessary to serve a growth rate in the neighborhood of 80 stores per year.

$28 Million WMS Project Underway
In 2000, Genesco embarked on a $28 million WMS (warehouse management system) improvement project. General Manager Mark Teegarden was charged with forming a project team. The company chose supply chain solution implementers Q4 Logistics (Santa Ana, CA) to lead the project and turned to logistic and distribution systems integrator Fortna (West Reading, PA) as the facility designer. Manhattan Associates' (Atlanta) supply chain execution software PkMS was also selected. With this decision, Genesco decided it needed a manager with PkMS experience to oversee operations in the new DC. Wesley Lankford was brought on board in the fall of 2001 to oversee the system's implementation at Genesco's brand-new 322,000-square-foot Lebanon, TN, DC. Lankford had previously managed a PkMS implementation at Publisher Resources Inc., a division of Ingram Book Wholesale (La Vergne, TN), in 2000.

In June 2002, the company began using PkMS in the facility to test distribution to 25 Journeys Kidz stores. Lankford recalls it being a very small operation for a several-hundred-square-foot building. But by the end of February 2003, Genesco was shipping to 579 Journeys and 35 Journeys Kidz stores from the new building. Distribution operations from Genesco's Fayetteville, TN, DC are gradually being moved to the new Lebanon facility. By the end of its current fiscal year (January 31, 2004), the company plans to be handling distribution to Journeys, Journeys Kidz, and Jarman stores under the new roof.

One measure of supply chain success at Genesco is its cost per pair, or how much it costs the company to receive and ship one pair of shoes or socks to a store. "Now that we've got a significant volume leaving the building [at press time its record was 370,000 units in one week], we'll be able to begin measuring our cost per pair," says Lankford. While this cost is yet to be determined, even if it were to cost slightly more to ship a pair from the new building than it had from the old, the increase in sales made possible by increased shipping volume would likely pay for the difference. Simply put, it may cost slightly more to get a pair of shoes to a store, but the store can't sell what the store doesn't have.

In the meantime, the new DC has already improved the company's distribution efforts. While Genesco is unable to disclose specific figures, Lankford reports picking rates that equal or exceed the maximum output of the old DC, which has improved the company's ability to ship fresh product to stores during seasonal sales peaks. Order accuracy has improved, and there is less variation between receipts at the stores and invoices from the DC. The new DC will also allow more stores to receive multiple shipments per week. Some of Genesco's higher volume stores can now receive up to three shipments per week, and those shipments can be staggered across days with slower sales volumes. Lankford says the new system has reduced Genesco's need for offsite storage, reduced payroll expenses, and increased productivity to the tune of more than $500,000 per year in savings.

Vendor Compliance Smooths DC Operations
Lankford describes the PkMS implementation at Genesco as relatively vanilla, compared to other PkMS installs he's seen. "The [SCM] program is almost infinitely configurable," he says, "so my implementation is going to be different from the next guy's." But even a straightforward installation can require systems changes that reach beyond the four walls of the DC. Genesco is in the process of getting vendors to send ASNs (advanced ship notices), which he says is critical to smooth receiving and distribution in PkMS. To check shipment accuracy, Genesco employees scan bar code labels on received merchandise and compare that information to the ASN that preceded the shipment.

ASNs also enable improved space and inventory planning for both the DCs and the stores. At the DC, the ASN number is applied to each case of product and used by PkMS as a unique identifier that helps determine where the case should be palletized. If there is an immediate need for that product at any store, PkMS identifies the need and the product and directs the case to the active pick face location. "The software runs store models on the mainframe host that determine what styles, sizes, and volumes go to which stores, and when," explains Lankford. The earlier the DC can compare the stock needs of the stores and the shipments it will receive from vendors, the better.

While technology at Genesco's DCs might not rival Spacely's Space Sprockets just yet, there's no doubt the company has motored away from the Flintstonesque practices of yesterday. Lankford, for his part, continues to analyze new supply chain execution offerings and DC technologies, including RFID tagging and voice picking. While these new offerings catch his eye, he's going to stick with scanners and PCs for now. "We're running new, yet tried-and-true technology," he says. "We don't want to go beyond the Jetsons at this point."