Distribution Solutions
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