Magazine Article | July 20, 2006

Improve Merchandise Visibility

Source: Innovative Retail Technologies

By integrating its WMS (warehouse management system), POS, and accounting systems, this retailer improves inventory management in its FCs (fulfillment centers) and stores.

Integrated Solutions For Retailers, August 2006

Depreciation calculations differ for rental retailers, as items are stored, rented, or sold. Aaron Rents, Inc. is a rental company, sale and lease ownership company, and specialty retailer of office furniture, electronics, and home appliances. It does business through franchised and company-owned facilities. The sales and lease ownership facilities are stocked via 16 geographically separate FCs. As the company grew, the manual distribution of $60 million of inventory per month was no longer feasible.

Mike Gamble, IT director of the financial analysis service team, sought greater visibility of merchandise throughout the organization. He wanted to track inventory arriving at the FCs and daily shipments to stores. He also wanted store associates to have real-time access to inventory delivery schedules for nearby stores.

“Previously, when merchandise arrived at the FCs, employees manually typed the manufacturer’s serial number into a DOS-based system, created internal inventory serial numbers, printed labels with bar codes, and placed them on the merchandise,” says Gamble. “The process was rudimentary and had accuracy problems. Although it worked, we knew we could improve its speed and accuracy. We wanted all systems to interface with one another from the supply chain to the POS and accounting.”

In order to achieve greater visibility, Gamble needed to integrate his existing systems. Aaron Rents uses the Lawson GL (general ledger) system and a custom-developed ordering and POS system. Since 2004, it’s used Manhattan Associates’ PkMS Pronto WMS and transportation management systems (now called Integrated Logistics Solutions). Gamble considered adding a Pronto module, but thought an integration with all systems could provide more functionality. Gamble sought assistance from CIBER, Inc., a systems integrator that provides custom and enterprise solutions that interface with systems such as Lawson’s system. CIBER determined the necessary modifications for the systems to interface with one another and made some of the changes. Manhattan reconfigured Pronto and wrote some interfaces.

“Now, as merchandise arrives, the PO [purchase order] is downloaded from the Lawson system and items are counted,” says Gamble. “Bar code labels for all items on the PO are printed [with Aaron’s internal serial number]. Employees scan the internal bar code [using Symbol MC9000 Series bar code scanners] on the labels along with the manufacturer’s serial number on all items to synchronize them. The labels are then placed on the merchandise. The elimination of manual typing improved accuracy, and the process takes a fraction of the time it used to.”

Web-Based Ordering Provides Real-Time Access
Store employees now use a Web-based store ordering system that provides real-time access to the FCs’ Pronto data. This enables store employees to see available inventory, as well as delivery schedules to their store and nearby stores. When merchandise is deemed available, Pronto allocates the items to the specific store requesting them. This was never the case in the past, because Pronto tracked merchandise like a warehouse – displaying the total number of items at each FC, not the store scheduled to receive it. Therefore, two stores could have requested the last item in inventory. Aaron’s needs this granularity because it tracks depreciating items in great detail, so an item’s status is critical. The Pronto system interfaces with the Lawson accounts receivable system enabling items to be tracked when sold to franchised stores.

“Now we track the movement of all items, where they go, if rental agreements were fulfilled, or if products were sold,” says Gamble. “The accuracy of our depreciation process is paramount in this business. We improved accuracy in receiving merchandise and the confidence in our inventory data. The Web-based ordering and inventory systems enable our associates to provide better service to customers.” While only 3 of the 16 FCs were converted to the new system, Gamble plans to upgrade the others after the 2006 holiday season. “We want to see if increased visibility changes stores’ ordering behavior and compare the ordering data with the merchandise in inventory,” adds Gamble. “At that point, we’ll determine if our buyers are purchasing too much or too little.”