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Year of Living Distribution Dangerously
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December 4, 2008 - Supply Chain Digest Newsletter



Year of Living Distribution Dangerously

I’ve done projects before and since, but nothing was quite like the year I spent at totes Isotoner putting in an automated distribution system in a new DC in Cincinnati 10 years ago.

I know many of you took a look at our case study on the totes’ system we published earlier this week in our On-Target newsletter. Current SCDigest Materials Handling Editor Cliff Holste and I led the design and implementation of the project throughout 1998. I hadn’t been back to totes since, while Cliff had been back early on, but then not for many years himself.

It was great to see the system still running strong, under the great leadership of Doug Baker, VP of Operations, back then Director of Engineering, and a very smart and good man.

My family still calls it the “lost summer,” as I was working seven days most weeks and hellacious hours. The good news is that forced my wife to do most of the lawn mowing – a trend that has happily continued to this very day.

Gilmore Says:  
"You learn pretty quickly which existing supervisors “get it” and those for whom the change from the manual mode is just too much."

What do you say?
Send us your Feedback here


The project started when totes, the iconic umbrella maker (at the time was owned by private equity company Bain Capital) was presented with the opportunity to buy slipper giant Isotoner away from Sara Lee – at a very attractive price. Isotoner at the time was, and still is, one of the best brands in retail, but behind the consumer appeal, its operations were a mess and, as a result, also its bottom line.

This enabled totes not only to negotiate a great price, but see huge opportunities to reduce supply chain costs, especially in distribution, where Isotoner’s ratios were totally out of whack.

I can see why. We visited an Isotoner DC in Edison, NJ where you could barely walk through the facility for the number of workers in the place. I am pretty sure we were told operators peaked at an astounding 800 during the Christmas shipping season. Many were doing light repairs to product that had come into the DC from Asia with quality issues. In the other Isotoner DC in Greensboro, NC, workers stood in long lines to get assignments from supervisors sitting at folding tables. The manager had left by this time, and in his office we found retail chargeback notices from major department stores laying here and there that would make your head spin.

The result was the new, combined facility consolidating one totes DC and the two from Isotoner in a distribution park in northern Cincinnati. Almost 500,000 sq. feet. New WMS and RF for the first time. High-speed carton sortation. An innovative split case picking system, designed by Holste. Auto print and apply of UCC-128 shipping labels for the retailers.

All this on a fast track. We started planning in late 1997 for a building and system that was to be live by early July 1998.

There were troubles, of course.

The shut down of the Isotoner DCs, especially in Edison, was not great, and almost delivered a fatal blow. The full case picking system relied on reading case code SKU bar codes to trigger the print and apply. Operators working out the string in Edison, under a manager who was to come to Cincinnati, but in retrospect was not given enough understanding of the requirements, wound up frequently labeling cases for delivery to Cincinnati with different numbers of items (12, 24, 36) of a SKU using the same case code bar code – a situation not realized until the inventory had largely been received and putaway in the new building.

This ultimately necessitated full case pickers stopping at a check station before placing cartons on the conveyor system, where Isotoner items were often repacked or relabeled.

Totes had very heavy split case volumes, with thousands of SKUs - the bane of soft goods companies with style, color, size attributes for base items. Holste designed an automated system where cartons were routed to any of 24 zones in zone picking sequence, with cluster picking of short “trains” of cartons used in each zone. That design has become more common today, but was very new back then. The WMS provider, Manhattan Associates, had never seen it. Most companies used a pick and pass approach.

When the then VP of Operations saw the design, he told us: “Heck, this is going to be so darn efficient, the problem is going to be keeping the system replenished!” He said it in a positive way – but he was quite right. Replenishment of the split case locations became the bottleneck, in part because of an issue I still have never seen a great solution for: when volumes for a wave will wipe out a location’s inventory, but the required replenishment exceeds the location’s capacity when it arrives. Where do you put the stuff?

Ultimately, we made progress that year, and Baker got the thing fully ironed out subsequently. But ever since, I focused on replenishment strategies and processes much more, and encouraged many others to do so as well.

We trained the trainers, and the Director of Distribution Dick Jeans put together some nice training/process materials – none of which was enough, of course. There were totally new processes across every area of a 500,000 sq. foot building. I spent countless hours helping out process areas and individuals, sometimes stationary at a “help desk” of sorts that for weeks was always busy, sometimes zipping around to different areas, explaining again and again how things worked, as well as fixing the real and inevitable system problems that cropped up.

You learn pretty quickly which existing supervisors “get it” and those for whom the change from the manual mode is just too much.

Carton cube data of course wasn’t all that perfect. That led the WMS to occasionally pre-build pallets at the end of the sorter diverts that wound up to be nine or ten feet tall. Sometimes, you just had to laugh.

I went “native.” I rarely went in to my own office. I became part of the totes team, and in fact the CEO suggested that if I happened to be looking for something new…I had an entry card of course and pretty much had the run of the place. On Labor Day weekend, they gave everyone Sunday and Monday off, and I was in the WMS “war room” by myself I think on Sunday morning cleaning up some things when the CEO stopped by. We were the only ones in the building, and had a nice chat.

The weekend before the scheduled go live, we did physical inventory, and there were some system problems. I left late Sunday night, and actually slept enough that I didn’t get back until 8:00 am or so. When I entered the office area, my usual route in, I saw a couple of the IT guys looking ashen. I never fully understood what happened, but somehow in the tiredness and stress, the inventory file had been blown away. A version, not quite the latest, was eventually recovered from a tape back up or something later that day. So “go live” became “go home.” We finally shipped a very small order at about 10 pm that night. There at the time were Baker, Holste, myself, Jeans, one order picker – and the CEO. He wanted to see an actual order shipped and billed. He even applied some UCC-128 labels and scanned a few bar codes. Mike Dunn, still at Manhattan Associates and also a very good guy, was another key part of the team.

In the end, we made it through the Christmas shipping season, not as efficiently as we had hoped, but I was told, still in total, at a very attractive cost versus the three DC comparisons. Baker has made many smart improvements over time, some of which in truth I am kicking myself a little about for not having thought of myself. You can read the case study here: totes Isotoner Case Study. As we note, it’s not often anyone goes back to look at a system and its flexibility and evolution over time.

Towards the end, I accepted a job as an industry analyst with META Group, later bought by Gartner. They wanted me to start right away, but I told them I couldn’t possibly leave until the Friday after Thanksgiving, the date when traditionally nearly anything going to retail for the Christmas season had to be out the door. It was hard to leave after what actually was probably the most memorable single year of my life.

Everyone should have such an experience.

Do you have any similar sorts of project stories you can share? Any funny things that you have seen happen in your company or as a vendor/consultant? Do we need to more often look back at projects and systems for lessons learned? Let us know your thoughts at the Feedback button below.

Let us know your thoughts.

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December 9, 2008


RFID Solution Helps
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December 16, 2008


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January 20, 2008


This Week's Supply Chain News Bites Only from SCDigest

Supply Chain Graphic of the Week - RFID and the Internet of Things

Supply Chain by the Numbers Week of December 4, 2008

from Gartner and SCDigest
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Chain Research Study

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There was truly something to be thankful for last week as the
U.S. stock market rallied a bit following the Thanksgiving Day holiday.  Even if just a temporary tourniquet to slow down the hemorrhaging, our Supply Chain and Logistics stock index results reflected the broader market’s rally and were a welcomed relief.

See full stock report.

Each Week:

-Global Supply Chain
-Distribution/Material Handling
-Trends and Issues

Weekly On-Target Newsletter
December 3, 2008 Edition


Supply Chain Perspective

by Karin Bursa, VP-Marketing


Retail Supply Chain

by Wayne Usie, Senior VP-Retail,
JDA Software Group

Using Next-Generation Space & Category Management Strategies for Supply Chain Excellence


Gilmore's Daily Jabs

Remembering John Fontanella
THIS WEEK ON Distribution Digest


Holste's Blog: Distribution Center Improvement Wish List for 2009

>> Top Story: Looking Back on 10 Years of Distribution Center Automation at totes Isotoner
>> Vendor News: New Web-Based Tools for 3PLs from Manhattan Associates

Textile giant Milliken & Co, and its then CEO Roger Milliken, championed what supply chain movement in the late 1980s/early 1990s?

A. Click to find the answer below


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We have our first winner of the Feedback of the Week “Fuel for Thought” award – a $20 gas card will go to Corbin Fowler, Senior Manager, Supply Chain Solutions at Mead Westvaco, for his comments on our piece summarizing a study that says the Procurement function is a corporate under achiever (the study’s opinion, not ours).

Don’t miss your chance – send us some great feedback on any article in SCDigest, and you may just end up a winner too – and it buys a lot of gas right now!

You also find letters on whether to use your own or the 3PL’s WMS, top executive supply chain priorities, lean versus six sigma versus theory of constraints, and the Mexican Trucker stand off.

Feedback on the Week – On Procurement:

Perhaps the biggest barrier to raising the profile of the procurement function is that doing so does not bring value to a company. The supply chain, formerly known as operations, is but one facet of a company. And, procurement is but one facet of the supply chain. Business leaders are tasked with bringing the primary facets (sales/marketing, finance, supply chain, human resources, and in some cases IT) facets together to implement a strategy and achieve business goals. A focus on raising the profile of procurement, rather than focusing on the larger supply chain, dilutes the attention. This not only dilutes the attention on procurement, but often does so for other supply chain functions - plan, make, deliver.

The focus of too many procurement functions has been to raise the profile of procurement to the CEO. The focus should be on raising profile to supply chain leadership - in order to bring value to the team of which procurement is a part.

An analogy - procurement is the fuel man in a Formula 1 team. Certainly there needs to be excellence in this activity for the success of the pit crew (operations) and for the success of the overall race team (the business.) Improving fuel delivery speed by 10% certainly would appear to be beneficial. However, only as it relates to the improving the overall speed of the rest of the pit crew activities (tire changing, etc.) Doing this will likely raise the profile of the pit crew, and the fuel man.

Then, this must be coordinated with the rest of the race team (driver, tire suppliers, spotters, engine team, etc.) to raise the value of the business.

Corbin C. Fowler
Senior Manager, Supply Chain Solutions

On Exec SCM Priorities:

Interesting but sad commentary on the CEO's who participated in your survey.

Math and Economics 101 - if I use less resources, my costs go down. And if demand is down for that commodity, the costs go down further. 57% of the CEO's want to reduce Supply Chain costs yet only 4% are concerned about reducing their carbon footprint? Are they smarter than a 5th grader? Apparently not .

Dwight Boehm, P.Log
Manager, Solution Design
FIT Logistics

On 3PL or Own WMS:

I read your interesting article and there are definitely pros and cons on which WMS to use, your own or that of a 3PL, especially when you’re talking about leading commercial packages out there.

The usual commercial packages are your typical enterprise software application that can involve a costly and potentially lengthy implementation process.

One consideration for the majority of companies is using an on-demand/SaaS-based WMS where everything is done over the Web with little or no infrastructure investment needed. While traditional software commercial packages offer a high level of functionality that most 3PLs would find to be overkill, the reality is that most companies want something that just works without all the bells and whistles. The added benefit of an on-demand WMS is that as your trading network grows and you add/subtract partners, you can scale with a few clicks of the mouse.

Albert Fong
Smart Turn

On Mexican Trucker Debate:

Any Mexican carrier wishing to operate within the US or Canada needs to be subject to the same EVA tax that is currently applicable to a US company attempting to utilize Mexican carriers and warehousing companies in Mexico.

This 35% tax on operations forces a US company to open up its own Mexican company to operate competitively in carrying goods from Mexican (read US) manufacturing companies from Mexico into the US.

Essentially when a US company incorporates a Mexican subsidiary in Mexico, the Mexican tax rules apply and the extraction of profits becomes subject to regular Mexican tax rules. This same set of rules needs to apply to Mexican carriers attempting to do business in the US. When a Mexican corporation incorporates a US subsidiary in the US, that subsidiary will become subject to the same rules and regulations with regard to minimum wages, workman’s compensation, hours of operation etc..

Then we will all be on an equal footing.

eF3 Systems Inc.

On TOC, Lean, Six Sigma:

TLS (Theory of Constraints, Lean, Six Sigma) is by far the best approach – and in that order.

TOC, if used, must be the foundation from which you make decisions about where to apply Lean and Six Sigma.

Judy Yetter, Director
Frehn Center for Professional & Organizational Development
John L. Grove College of Business


Q. Textile giant Milliken & Co, and its then CEO Roger Milliken, championed what supply chain movement in the late 1980s/early 1990s?

A. Quick Response.

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