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Warehouse, Labor Systems Come to the Rescue |
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Business software should be like a trusted ally: there for you in the good times and the bad. Today's economic slump is testing the mettle of corporate management and the technology deployed to help them get through the lean times.
In 1995, Dart Entities, a Los Angeles trucking and warehouse-services company, bought the IRMS Warehouse Management System from Integrated Warehousing Solutions. IRMS was installed at two leased warehouses in the Chicago area and, within a year, helped reduce the number of workers by half.
Because IRMS made it possible to assign the exact number of workers to fill orders on any given day, Dart went from 400 people working around-the-clock to 200 working two shifts a day. With these kinds of cost savings and a booming economy, Dart in 1999 opened its own warehouse to replace the rented facilities, expanding from 300,000 square feet to more than 720,000.
The new facility was state-of-the-art. The combined length of conveyors used to carry merchandise went from 2,000 feet to nearly two miles. Automated systems helped workers pack boxes with Barbie dolls, TVs, DVD players, and videos. With all this new equipment and technology, Dart was able to reduce its workforce further, eventually reaching today's level of 60 people. The warehouse now operates between 10 and 12 hours a day, five to six days a week.
At its peak, the facility moved 2.5 million shipments a year and received a daily average of 35,000 to 40,000 orders that filled 100 trucks. The warehouse, which had 25 customers, specialized in filling orders for online retailers and catalog companies, and held on average $50 million worth of inventory.
Unfortunately, the boom ended with the dot-com debacle and Dart suffered like many other companies. Today, the warehouse serves 15 customers and the number of orders it handles this year is expected to drop "more than 10 percent," said Herb Duggan, general manager of the Naperville, Ill., facility.
Dart Entities, founded in 1938, is privately held, so revenue and earnings aren't released. Nevertheless, the warehouse took a big hit last fall when its largest customer, the retailing giant Sears, decided to take its business in-house.
"It was a surprise," Duggan said.
Dart had stored and shipped inventory for Sears' online retail sites and some catalog sales. But a combination of good management and technology are expected to carry the warehouse operation through the lean times. IRMS, built on Progress Software's OpenEdge business application platform, continues to help keep labor costs down.
At Dart, labor costs averages between 35 percent and 40 percent of expenses, with some projects requiring the company to spend 50 percent on labor.
"Customers outsource the labor-intensive stuff and keep the rest in-house," Duggan said. "I'm the guy they're going to dump the junk on. They're going to dump the heavy labor activity on me."
To help increase sales, the software's order-management system has helped Dart achieve an accuracy rate of more than 99.9 percent.
"With that kind of accuracy, you can be more price-competitive, because you're not building in projected losses [for missed orders]," Duggan said.
Customers send orders to the warehouse through every means imaginable: fax, telephone, floppy disks, file transfers, electronic data interchange (EDI), and extensible markup language (XML) over the Internet. All arriving inventory is scanned into IRMS so it can later be matched with orders. All merchandise heading out is scanned into the system, which records that the order has been filled and is en route.
Each afternoon, warehouse managers check IRMS for the list of orders that have to be filled the next day. Based on the information compiled by the system, managers can decide how many workers will be needed and in which areas of the warehouse. If fewer workers are needed, some can be told to stay home. If more workers are needed, Duggan will bring in friends or family of permanent workers, or call temporary employment agencies.
"I can place a call by 2 p.m., and have 30 to 40 people in the next morning," Duggan said.
Duggan has two former warehouse supervisors trained to manage orders on IRMS, which runs on a Sun Solaris server. Integrated Warehousing Solutions handles system maintenance.
So far this year, Duggan is seeing an increase in Internet retail sales, but a decline in the much larger catalog sales.
"Overall, retail sales are flat across the board," Duggan said. Therefore, he expects business to remain slow for a while.
"We're in a tough economy."
Nevertheless, he's confident that the technology he has in place will continue to help keep costs down, and prepare him for when people start buying again.
Source: Internet Week, CMP Media, LLC
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