Year of Living Distribution Dangerously Redux

Last week, we celebrated the 20th anniversary of SCDigest and my inaugural First Thoughts column. (See It's been 20 Years of SCDigest.)

Continuing that celebration, I am re-runniing one of my favorite columns in those 20 years, on the year of life I spent implementing a new Warehouse Management System at totes Isotoner.

It first ran in December 2008. Hope you enjoy.

Original Column Starts Below:

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.

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 the 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, then 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. 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.

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