September 1, 2004
by Anthony Coia
Candy distributors are using information technology to improve their warehouse processes and their services to retailers.
One of the most important links in the candy supply chain is the one between the wholesalers or distributors and the retailers. The more accurately orders are placed and filled, the less likelihood there will be returns, out of stocks, and other problems that reduce overall efficiency. Candy wholesalers and distributors are benefiting from information technology designed to reduce supply chain costs and increase customer service levels. The latest in information technology has allowed distributors to improve not only their own supply chain efficiency, but has also enabled retailers to improve their profitability.
One of the main challenges for candy distributors is managing the warehousing and distribution processes in an efficient manner. One company that has embraced information technology to improve these systems is Ohio Valley Wholesale Distributors, Inc., Ashland, Ky. The company serves convenience stores in Ohio, West Virginia, and Kentucky with a variety of candy products that total about 12 percent of its business.
The problem that Ohio Valley Wholesale faced was that it had outgrown the software system that it had been using to manage its warehouse. One of these problems was that it could not obtain real-time visibility of its inventory, which meant that purchasing was also less efficient than desired.
So, it turned to a company that specializes in information technology for wholesalers called TurningPoint Systems, Inc., Danvers, Mass. Ohio Valley Wholesale uses ProfitPoint from TurningPoint Systems, which is a software suite that provides end-to-end warehouse management and distribution solutions.
Jim Glockner, president of Ohio Valley Wholesale, says that from the time an order is placed by the customer or the sales representative to the time the manufacturer replenishes the stock, ProfitPoint manages the movement of inventory, documentation, and financial information in real-time. Ohio Valley Wholesale imple-mented ProfitPoint to track every phase of its operation, including sales and returns, inventory turns and warehouse space utilization among others.
With ProfitPoint, Ohio Valley Wholesale had the added functionality needed to generate enhanced, up-to-date business data and financial reporting. Ohio Valley Wholesale was able to reduce its inventory by 28 percent and improve customer service levels by 4 percent.
Better retail relationships
Another ProfitPoint user is Atlantic Dominion, Inc., Virginia Beach, Va., which serves retailers from Delaware to Georgia.
“This system lets candy buyers know their purchase requirements based on lead-time,” says Kevin Barney, executive vice president, sales and marketing. “The system will tell us what is allocated for future sales, when the next delivery is due, and the inventory on-hand. It also generates reports for our retailers that enable them to track by manufacturer, UPC code, quantity, etc.”
One of the key advantages for Atlantic Dominion is that it helps to ensure a better stock position. However, the biggest advantage, according to Barney, is the 3- to 4-percent improvement in the fill rate.
Glockner of Ohio Valley Wholesale says that ProfitPoint has helped to reduce inventory and increase inventory turns by 30 percent. “We have also improved the fill rate from 95 percent to between 97 percent and 98 percent, and we reduced out-of-stocks,” he says.
Giving voice to improved efficiency
Another type of efficiency-boosting information technology for candy distributors is called voice recognition software. This technology can be used for different warehousing functions such as receiving, put away, or replenishment, but the most common use is for order picking. Henry’s Foods, Inc., Alexandria, Minn., is a foodservice distribution company that serves convenience stores in Minnesota, North Dakota, and South Dakota from its 150,000 square-foot distribution center. In July 2001, the company began using a product for order picking called VoiceLogistics from Voxware, Inc., Princeton, N.J.
Brian Eisvold, vice president at Henry’s, says that his company wanted to streamline and automate its entire warehousing operation, improve picking accuracy, and increase throughput. VoiceLogistics works by verbally interacting with the worker in order to ensure that correct orders are picked.
One of the specific benefits of VoiceLogistics was an improved order fill rate; it is now more than 98 percent. A second benefit is reducing the number of mis-picked items. A third key benefit is improved warehouse efficiency. “This has enabled us to reduce the number of employees and to reduce labor costs by between 10 percent and 15 percent,” says Eisvold.
Voxware’s vice president of marketing, Stephen Gerrard, says that candy picking involves picking from flow racks into totes that are loaded onto trucks. With VoiceLogistics, Henry’s uses check digits and quantity verifications in order to make sure that the right products go into the right tote.
Says Gerrard, “The pick and pass application allows Henry’s to have dynamic zones, where, depending on the work load, the customer can decide to add more people or less and the application will allow users to work between them.”
Warehousing efficiency improvements for Henry’s Foods means benefits for its retail customers as well. VoiceLogistics has improved customer service by increasing the fill-rate and reducing mis-picks, both of which were major complaints by retailers, according to Eisvold. He says that, “As a result, Henry’s delivers the correct quantities of the correct items, which makes for happier customers that want to continue doing business with us. We recognized that a paper-based system was subject to error. Thus, the perception of Henry’s Foods has improved, which was an unexpected benefit of this software.”
In addition to its use of VoiceLogistics, Henry’s Foods has also been increasing its use of a system that enables electronic invoicing of its customers. n