F. Curtis Barry & Company - Multichannel Operations & Fulfillment Blog

Laying It All Out in the Distribution Center

2009-06-02T21:53:03Z

This was written recently by Multichannel Merchant’s Melissa Dowling

Your warehouse layout plays a huge part in the effectiveness of your operation, says Curt Barry, president of operations consultancy F. Curtis Barry & Co., At a session during the NCOF show in Las Vegas in March, Barry detailed some of the steps to reviewing a distribution center layout.

It’s important to understand the utilization of the current warehouse layout, and use what is available, he said. You have to determine how the building dictates process flow.

Oftentimes you can’t see any space in a warehouse, Barry said. This can be a big problem when your goal should be to reduce the number of times you touch product. “How many times to you have to move product around” because of inefficient layout? Barry asked.

You also need to look at effective space and cube utilization and pick and storage design, as well as the number of dock doors, how materials handling equipment operates, and system capabilities and restrictions.

What happens when you don’t have enough warehouse space, and moving or expanding isn’t a near-term option? There are a few things you can do, Barry said.

For one, you could narrow the aisles in the facility to make room for more products. Or you could add a mezzanine if you have room to expand vertically. You might also consider a second work shift so that warehouse staff isn’t running in to each other.

But the main thing is getting management to act on slow-moving merchandise, Barry said, which is typically 80% of the inventory in any warehouse. “Distribution centers are crammed with stuff that doesn’t sell,” he noted.

Measuring Your Employee’s Performance

2009-06-02T21:52:32Z

The following is from a recently received email sent to Curt Barry…

Dear Curt -

We met briefly at the NCOF conference in Vegas, and I wanted to reach out to you regarding performance errors. I was hoping you could provide me with some insight into how other 3 PL fulfillment companies manage employee errors. Currently, we don’t have a strong policy in place to deal with these issues.

Some questions that arise in my mind are:

1. How many mistakes is too many?

2. Should the consequence be different in receiving than picking or packing?

3. If there is a larger mistake that causes our company should there be a more severe consequence?

I understand that everyone makes mistakes and I would like to allow for learning and coaching, but I also want to make sure that our employees have a formalized consequence to ongoing errors, and they know what to expect. If you have any feedback on this I would really appreciate it. Or, if you know any warehouse managers I could speak with to get ideas on what they do that would be great!

Thank you so much for your time!

Sharon, VP of Client Services, 3PL Company

Dear Sharon -

In my opinion, there are a couple levels of issues:

Weekly productivity reporting by person through out the call center and fulfillment. Our clients display these by department and person on white boards, reports and monitors throughout the facilities.
Contact center monitoring should be in place. There should be a form for evaluating the calls and a weighting system for the responses. What are your standards for monitoring experienced core employees versus new hires? Companies have developed coaching approaches to improve employees, get them to accept responsibility for improvement or a basis for asking them to leave the company.
Personnel policy that deals with severe HR issues. These include theft, embezzlement, sexual harassment, etc. These should have clear documented policies which employees understand.

In terms of error rates, we would expect that controllable error rates would be only 0.5%. Meaning, 99.5% of all major transactions are error free. In bar coded systems it will be much higher.

In a speech a number of years ago when I made the statement about error rates of 0.5%, a national FedEx manager pointed out that meant 73,000 of their customers would not get their package on time in any given day. What is your management’s attitude about errors? And you are in a 3 PL service so what guarantees are you making to clients? Hope this helps. Call me if I can further explain.

Curt Barry

Hey, blog readers, what’s your company’s approach?

Systemax Exiting PCS Hosted Software Business

2009-06-02T21:48:17Z

Press Release from 6-2-09 from BusinessWire.com

– Company Ceasing External Sales –

PORT WASHINGTON, N.Y.–(BUSINESS WIRE)–Systemax Inc. (NYSE: SYX) today announced that it is exiting the ProfitCenter Software (”PCS”) hosted software business. The Company is working on transition plans with its customers who are currently live, and the Company will not undertake any new hosting arrangements. As part of the consolidation, a majority of the PCS workforce will be leaving the Company and the remaining PCS workforce has been consolidated into the Company’s Port Washington, NY location.

These and other PCS-related actions are anticipated to result in incremental one-time pre-tax charges to earnings during the remainder of 2009 of approximately $4 to $5 million. Excluding these charges, the Company expects the consolidation will result in a reduction of its cost structure exceeding $10 million annually. During 2008, revenues from the PCS segment generated less than $500,000 of the Company’s total revenues of $3.0 billion.

Richard Leeds, Chairman and Chief Executive Officer of Systemax, commented, “While we had significantly narrowed the focus of our PCS business segment over the last several quarters in an effort to establish a sustainable business model, after careful evaluation we have concluded it is in the best interests of the Company and its shareholders to reduce our investment in the software business in order to improve our profitability, strengthen our balance sheet, improve our operating cash flows and deploy capital in areas which are closer to the core of our direct marketing and retail businesses. We believe the PCS product is the best in class java, web-based order management and ecommerce system available, and it has been instrumental in helping us to manage our internal needs. However, we have been unable to profitably market, sell and implement the software on a hosted platform model. The current economic environment is very difficult to sell the product into, and we do not anticipate that changing in the near future. We will continue to use the proprietary software in-house and are currently evaluating our options to maximize value of the software and other assets that have been developed.”

About Systemax Inc.

Systemax Inc. (http://www.systemax.com), a Fortune 1000 company, sells personal computers, computer supplies, consumer electronics and industrial products through a system of branded ecommerce web sites, direct mail catalogs, relationship marketers and retail stores in North America and Europe. The primary brands are TigerDirect, CompUSA, Circuit City, Misco and Global Industrial. It also manufactures and sells computers and accessories under the Systemax and Ultra brands.

Immediate Reaction About PCS Shutdown

2009-06-02T18:15:33Z

An email received this morning about PCS…

Dear Curt -

I was stunned at the PCS announcement. Certainly, there was a lot of hype over the last 2 years about PCS and the SaaS model. What do you think the lessons are?

Mark, CEO of $25 million catalog+e-comm company

Dear Mark -

Here are some lessons I think we all can say we “re-learned”. They apply to all client and vendor software relationships:

It’s about trust. From the vendor’s perspective, if the software functionality isn’t available but the vendor says they can develop it, what’s the process for specifying function and getting it developed? Can the vendor be trusted to deliver on their promises? From the client perspective, are they a good partner to impart industry knowledge?
Software development is a people function. How well do the vendor’s people know the application and your type business?
SaaS model. It’s still in its infancy. It might not be appropriate for very large and complex companies. Order Motion and Demandware seem to have growing businesses.
How do these points translate to cost, timeline and risk to your business?

Thanks for your email,

Curt

Hey readers, what other lessons have we learned about PCS’ shutdown? If you are a PCS user and need assistance selecting and installing a new system, contact us immediately at jbarry@fcbco.com or call 804-740-8743.

Systemax Shutting Down PCS Software

2009-06-02T18:04:47Z

As written in Multichannel Merchant Magazine by Melissa Dowling on 6-2-09

Computers manufacturer/marketer Systemax announced yesterday it’s getting out of the ProfitCenter Software (PCS) hosted software business. The company is working on transition plans with current customers and not taking on any new hosting arrangements.

Founded 2002, PCS is a java, Web-based order management and e-commerce system. Systemax chairman/CEO Richard Leeds said in a release that the company has been unable to profitably market, sell and implement the software on a hosted platform model.

The PCS segment generated less than $500,000 of the Systemax’s total revenue of $3.0 billion for 2008.

With its SaaS approach, PCS certainly blazed a new trail, says Curt Barry, president of multichannel operations and fulfillment consultancy F. Curtis Barry & Co. “Every time a vendor or resource fails in our industry, to me it’s a tragedy,” he notes.

Barry’s company began receiving several calls from PCS clients about the shutdown last Friday. It’s now working with several PCS users to help them make transitions to new vendor platforms.

An orderly decision and transition realistically “needs to happen in the next six to eight months for companies,” Barry says, based on a recent discussion with PCS president John Marrah.

Barry says that Marrah assured him that Systemax will do everything it can to help the current PCS clients. He also says Systemax is actively looking for a buyer for the application and technology used in the PCS product.

As a result of the consolidation, most of the PCS workforce will be leaving the company, while the remaining PCS workforce has been consolidated into the Systemax’s Port Washington, NY, location.

These and other PCS-related actions are expected to result in incremental one-time pretax charges to earnings during the rest of this year of about $4 million to $5 million. Excluding these charges, Systemax expects the consolidation will save more than $10 million annually.

Systemax bought the CompUSA brand, trademarks, and e-commerce business in February 2008, and late last month it won a bankruptcy auction for the e-commerce business and intellectual property of Circuit City Stores. The company also includes the Global and TigerDirect brands.

If you are a PCS user and need assistance with finding and installing a new system, contact us immediately at jbarry@fcbco.com or 804-740-8743.

ProfitCenter Systems (PCS) Announces Shut Down

2009-06-01T19:47:38Z

Last Friday we received several calls from PCS clients about the announced shut down notice they had just received. This morning I talked with PCS’ President John Marrah to understand better the reasons and what the time frames are for companies to make transitions to new vendor platforms.

Two things which I wish to pass along to my reader’s from John Marrah:

Systemax and Mr. Marrah are going to do everything they can to help the current PCS client companies make an orderly decision and transition. The reality is that this needs to happen in the next 6 to 8 months for companies.
On behalf of Systemax, Mr. Marrah also said that he is actively looking for a buyer for the application and technology used in the PCS product.

I’m not going to editorialize over the bones of PCS. Every time a vendor or resource fails in our industry to me it’s a tragedy. Certainly, PCS with its SaaS approach blazed a new trail. Our industry thrives on new approaches, no matter if it’s technology, data base approaches, printing technologies, e-mail marketing approaches.

We are working with several PCS users to chart their new directions. Contact us if we can help you.

BI systems across the enterprise

2009-05-29T14:28:42Z

The most serious business information problem companies face is finding a “single version of the truth.” Many companies are installing best-of-breed systems for order management, fulfillment, call center, marketing, product information, inventory, finance and e-commerce.

Yet no one vendor in the marketplace today can provide more than two of the best-of-breed components needed. Even most ERP systems available to direct marketers don’t provide specialized direct, retail or warehouse management functions that are as good as best-of-breed.

Such systems have given companies access to the best system functionally for end users. But even when they are integrated with one another, you still have numerous - and differing - occurrences of key data and metrics.

The result of all these silos of information is that no one system provides more than 30% of the data needed by senior management; for larger companies it may be only 10% to 15%.

Top managers have to request that department heads pull data with spreadsheets, use access databases, or ask business analysts to come up with reporting. These manual efforts mean management’s reporting depends on delay-riddled, error-prone processes.

What’s more, valuable productivity and service data exist in systems to which management may not have access or of which they may not be end users, such as telephone switches (ACDs) and e-commerce analytic systems. And with database structures and languages that can span 25 years of systems development, data often doesn’t reconcile from one information system to another.

Simply put, these systems and data flows can’t deliver the single version of the truth you need. Management faces the question: On which version of the data should we base our decisions?

Dashboards, metrics, alerts

Business intelligence (BI) solutions with dashboards and executive analytics can, potentially, solve this problem. By creating standardized and normalized databases that sit on top of your best-of-breed systems across the enterprise, those databases open up huge possibilities for management to sharpen critical decision-making.

You must also select a single, common version of data that is available in each best-of-breed system. Executives will, ideally, be able to select key metrics that can then be set up on a desktop, laptop or PDA for real-time monitoring of areas for which they are accountable.

In fulfillment, this may include orders shipped, orders carried over, productivity by department, or labor costs. Merchandising may want to see performance against the sales plan, top-50 selling products, products that are running low on inventory, or slow sellers that are potential candidates for liquidation. And marketing is likely to want all the current promotions and their sales and percent completion to plan, results from e-commerce analytics, and so on.

More than simply extracting data, such solutions allow management at various levels to set up actionable key performance indicator (KPI) alerts that proactively notify the executive when “dials” indicate a variance from an acceptable range or, conversely, extremely high performance.

Another feature of such BI systems is the ability for executives to drill down into the details that are the basis for their dashboard dials and alerts. So for an inventory control manager who has a dial for excess aged inventory, the drill-down would show all the key item-level inventory statistics for slow selling products with excess inventory.

Think for a minute: What data do you want to gain access to across your business? What information do you need, as a member of senior management, to run the business?

The key results and metrics a company president may want to be able to view regularly on a personal dashboard would include demand to net sales; call center, fulfillment, marketing, inventory and finance. Much of this is not found in any single information system. A number of the analyses and KPIs are created by including data mixed and matched between information systems.

The personal dashboard shown on page 54 represents a drill-down into each of the six core areas. The chart “Source data across the enterprise,” shown above, shows the best-of-breed system, independent system or spreadsheet from which the source data is drawn and in which the drill-down occurs.

One of the key benefits is that management can align the analysis and reporting with their short- and long-term strategy. It’s not just about reporting, but about achieving improved performance management and profitability of your business.

Many views, one set of data

Whether you are analyzing inventory levels or fill rates, demand or sales, the new BI tools ensure all departments are using a standardized view of the same data. Such BI systems also allow users to take cuts of the data and compare them in multiple ways, including this year to last year or actual to plan, as well as to reassemble the data and analyze it from one department to another.

Each department needs to maintain its own way of analyzing data, but also be able to bring its plans and results together in a consistent, uniform way.

Here’s an example of an advantage provided by the access to uniform data that these BI solutions allow. Merchandising, marketing and inventory control may have different information needs during the product and promotion life cycle, but they all revolve around gross demand planning and results.

Merchandising wants to know the sales trends and the quantity of each product that is needed across all promotions and channels - print, e-commerce and store. Marketing arrives at the catalog gross demand plan based on their circulation plans by drop, by house file, and by outside list segment.

Merchandising’s catalog preseason plans are built top-down by merchandise category, and bottom-up by product - but they should come close to tying together with marketing’s demand plans at the demand level.

It’s inventory control’s job to interpret the plans and selling results and purchase product far enough in advance to be in stock when customers order. But management allows inventory control to purchase more product than the demand plans indicate, based on vendor lead time, vendor discounts offered, etc. - so they aren’t going to tie back to the others’ plans exactly.

Week-for-week, it’s hard to read selling trends and interpret them in a way that allows you to make the right decisions across the enterprise. The key departments above, along with the call center and fulfillment center, all benefit by sharing the latest sales plans and selling trends. BI solutions that can bring about the single version of the truth help keep everyone on the same page.

Reinvention of Retailing

2009-05-20T20:33:00Z

Across the newswire this afternoon, Richmond, VA based S&K stores can’t find a buyer, liquidation could start as early as tomorrow. Closing all 105 stores and selling all assets.

At one time, Richmond was the HQ for a number of premier retail brands. It isn’t the city because this is a great family environment to live in. It’s a sign of the retail times.

Look at the other Richmond retail chains that have gone belly up or been acquired!

Thalhimer Brothers, 100+ year old department store chain (division of Carter, Hawley, Hale now Macy’s);

Miller & Rhoads, 100+ year old competitor to Thalhimer’s (division of Allied Stores acquired by Macy’s);

This End Up Furniture - crate furniture manufacturer and retailer with 100+ stores; bankrupt.

Helig Meyers - low end to moderate priced furniture retailer in many of the small towns in America; bankrupt.

Circuit City - the premier electronics retailer in America 20 years ago, outfoxed by Best Buy; bankrupt.

And now S&K Brands, 105 men’s stores.

There may be others, excuse my memory. Sad state but it’s part of the changing landscape of retailing. America has far too many stores per capita. In the Age of Consumption, America needed to be only minutes from all the chains, specialty stores and markets. But the recession is shredding this thinking, destroying those buying patterns and conveniences and forcing us to be more frugal than we ever thought about being.

Life goes on- reinvention of retailing. What’s your point of view?

“SORRY FOR THE DELAY - THANK YOU FOR WAITING”

2009-05-20T15:05:54Z

I just had a pleasant experience with a back order from L.L. Bean. How can you have a good experience with something that’s been on backorder for 6 weeks? Well let me tell how.

First the background. On April 1^st, I ordered 5 pairs of chino pants and 1 was on backorder. The CSR told me immediately that the color would not ship until May 15, six (6) weeks later! I liked the color and the price so I let it remain on backorder.

Well guess what? The 4 other pairs came in 2 days shipped for free on my L.L. Bean card and express delivery which is standard. And the back order arrived before May 15^th much to my surprise-I’d forgotten it. Who hasn’t had nothing but disappoint with projecting back order dates arrivals?

But even as important, I found something of real interest printed on the backorder’s order/packing slip. On the line above the item was this message:

“SORRY FOR THE DELAY - THANK YOU FOR WAITING”

It struck me, how many times do we thank customer’s for their patience when we disappoint them? And better yet, how many times do we follow through with the promises we make on backorders? But then, that’s why I always use L.L. Bean as one of the standard bear’s for high customer service.

Ways to Save Money

2009-05-11T16:06:20Z

The following is a brief email that we received from one of our eNewsletter readers, in response to an article we wrote about saving money in your company…

Curt:

Just received your electronic May newsletter and wanted to send you some ways we are saving money.

Cut utility usage
Drop non productive associates
Reduce fulfillment goals from 92% to 85%
Keep 15% of your OTB in your back pocket
Only mail your best customers ( we are thinking of prospecting again this summer )
Drop marginal books
Flow inventory, more smaller orders, more frequently.
Keep margins high, but salt the assortment with redlines for the illusion of markdown.
Offer free personalization instead of a mark down.

We are actually making money on a reduced sales plan.

Hank

F. Curtis Barry & Company - Multichannel Operations & Fulfillment Blog

Laying It All Out in the Distribution Center

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