Mercator Lighting Completes Major Logistics Project with PULSE Logistics Systems

The company handles approximately 3,300 SKU's, with some 250 new lines being introduced each year and a comparable number being dropped from current catalogues. The majority of stock is received in full 40' container
loads of mixed SKUs at the 10,000 square metres Coolaroo Distribution Centre, which is fitted with five level high selective pallet racking, long span shelving, and various bin locations for such things as spare parts.

Orders number about 300 daily and range from a single line item order up to more than 200 lines per order. To fulfil these orders, split case picking is common, although full case and pallet shipments are also required.
Customer service commitment is that if an order is received before 2:00 pm it will be shipped the same day.

It was against this background that Mercator began its major logistics review. The organization had several objectives on its agenda, principle among those was to take logistics out of its more historical back room style role where it was largely viewed as an unavoidable overhead. The aim was to place the function in a front line strategic position where it could add substantial value to business operations and help drive future business growth.

Solution

Now, a little over two years later, the extensive enhancement project has just been completed-the final step having been the implementation of an advanced warehouse management system supplied by Progress Application Partner PULSE Logistics Systems that went live in February of this year. Built on the powerful Progress OpenEdge® platform, the PULSE WMS manages all aspects of the warehouse cycle from product receipt, workflow management, putaway and replenishment, through order management, product picking and order consolidation, to despatch, freight management and stocktake. The PULSE WMS offers capabilities that substantially reduce warehouse operating costs while, even more importantly, vastly improving customer service levels through faster order cycle times and reduced error rates.

Taking a Phased Approach

Prior to implementation of the PULSE WMS, Mercator had progressively improved its warehouse layout, introduced new materials handling equipment, and a freight management system, as well as undertaking an across the board process review. Collectively, all of these initiatives were expected to deliver a return on investment (ROI) in approximately two years. And in the words of Operations Manager David Hunt, "it has enabled us to achieve everything we set out to achieve."

"Logistics has substantially increased its contribution to customer service. The volume of orders we can now process will enable us to readily achieve the targeted growth. Cost savings are substantial. And we also have a much better, stress free, working environment in which there is a much greater level of job satisfaction".

From the outset, the company was convinced that it did not want to take a traditional in-house view of supply chain management in which the function tends to be regarded as a ‘back room' activity that can all to readily become ‘out of sight and out of mind'. So that while the aim was certainly to improve the cost effectiveness and efficiency of warehousing and distribution, it was also considered essential to have these tasks add real value to the organization's operations-playing a front line strategic role in areas such as customer service and by delivering the essential framework on which future expansion could be built.

As Mr Hunt explains, "there was a wide array of things that were on the agenda, and so our first step was to draw up a detailed plan that prioritised what we had to do, and set out a comprehensive step by step timetable. In this schedule, one of our immediate requirements was to acquire a range of new materials handling equipment, including 2-level man-up reach trucks. This gave us immediate productivity improvements and significantly reduced equipment repair and maintenance costs."

"At the same time, we completely re-organised the warehouse layout. We had a lot of issues to take into account. But it certainly saw us doing such basic things as better slotting fast moving items into prime picking positions. The re-slotting also had to effectively accommodate the large number of new products that we add each year, and the number that are removed from the product catalogue. Such a scenario means that stock location needs to be dynamic so that it can be continually changed to reflect the latest product fashions."

Mercator's next priorities included IT and warehouse operation controls. For example, with the use of express freight to achieve high service levels it was deemed that a new freight system would be required to ensure that freight costs were adequately controlled.

During this phase, Mercator also introduced additional workflow procedures and management controls and adopted a range of work place improvements within the DC. The latter initiative being designed to ensure that staff are multi-skilled, and to give personnel job variety, and to give the warehouse far more operational flexibility.

"We wanted everything else to be ready before we looked at the warehouse management system in detail. But it was always known that the WMS would play a critical role and would deliver very major benefits."

To define its WMS requirements in chapter and verse, Mercator formed a project team drawn from all relevant areas of the company including top management, customer service, IT and of course logistics itself. A request for proposal was issued to five short listed warehouse management system companies. And after extensive evaluation, the decision was made to select PULSE Logistics Systems as the WMS supplier of choice.

"As would be expected, there were a number of reasons why we selected PULSE. We certainly wanted to deal with a single supplier who would provide a total solution by taking responsibility for everything that was involved, including project management, computer hardware, software, RF equipment, implementation, training, and on-going support. However, of absolute importance was the quality and experience of the staff that the supplier would be able to assign to our WMS implementation project."

"We had to have confidence in these people, to ensure that as soon as we went live we could hit the ground running, and with no risk to our revenue stream or customer service. Indeed as things worked out, our new WMS operations was running totally smoothly, and readily exceeding the output of the old manual system just two weeks after we cut over," Mr Hunt notes.

One of the immediate priorities for the PULSE WMS was to add further benefits in the area of despatch and freight. Significantly, the WMS now consolidates multiple orders for the same customer into a single consignment, thus effectively reducing transport costs, and then exports the consignment data to the freight system to calculate the freight cost.

Mercator also uses the Progress-based system for EDI orders and scan packing to generate SSCC labels and then pick and scan pack orders in a single step process. Once the scan pack orders are despatched, the system automatically generates an ASN Despatch Advice and electronically sends this, via EDI, to major customers including OfficeWorks, K-Mart and Bunnings.

From an operations perspective, PULSE also contributes to Mercator's newly enhanced procedures and disciplines. For example, being fully integrated with the company's business system, the WMS now sees the clerical tasks of invoicing and manifesting as warehousing responsibilities-this move being credited with saving time and reducing error prone duplication of paperwork.

A "Quantum Leap Forward" with PULSE and Progress

"Overall, the PULSE WMS has delivered everything that was expected and has enabled us to achieve everything we wanted to achieve, both strategically and in terms of day-to-day operations. It's a quantum leap forward from what we had before, and a very beneficial one for the company", says Mr Hunt.
"Specifically, there was quite an extensive list of operational deficiencies that PULSE has helped us to eliminate. For example, our old processes imposed a number of inherent delays, including those due to the double handling of orders. That's been eliminated, with much faster order turnaround being achieved. In the past, properly managing priority orders was a continual problem. This is now straightforward and essentially effortless. By eliminating paper work, the warehouse has become error free, much faster and more productive. And we now have vastly superior management control over everything that is happening in the DC. At any time, managers and supervisors can get an instant and totally current view of where everything is up to and what work still needs to be done. They also have a series of automatic email alerts that PULSE will send the moment it detects an exception, that is, if something that is not as it should be."

Driving Business Growth, Reducing Costs and Improving Customer Satisfaction

As Mr Levy adds, "Today, our logistics is geared to help drive business growth, whereas the old processes were actually limiting expansion. Specifically, we needed PULSE to allow us to go on growingwithout adding substantial labour costs. And we have now achieved that aim quite well." "But aside from the sheer financial overhead of adding more operational staff to meet expansion, throwing more and more people into the warehouse is simply not the answer. It just doesn't work and you quickly get to the point where too many individuals can cause a loss in productivity, delays in filling customer orders, and an increase in error rates." "Indeed we've already seen logistics capability to better handle much higher sales levels with our recent ‘Bright Ideas' promotion. We run this marketing campaign twice yearly and it always adds significantly to our turnover. In the past, that added volume has caused some major and tough operational challenges. But having now run our first ‘Bright Ideas' promotion using PULSE, we've really reduced the bulk of that pressure and pain. Customer feedback has been very positive, with the response showing we are now much quicker and more accurate in fulfilling orders."

In stocktaking too, the Progress-based system has quickly proved to be of marked benefit. "Under the old way of working", Mr Hunt says, "we had to do a wall-to-wall stocktake twice annually, with each stocktake costing some $25,000 and closing the business for 2-3 days. Having already used the PULSE RF stocktake facilities for this, we are making major savings and not impacting customer service by having to shut down."

"Finally, we also think it's important that the WMS has taken a lot of stress out of working in the warehouse. Satisfaction has been put back into the job and that's great for everyone concerned including the company itself."

That said, Mr Levy is quick to stress that "logistics will remain a process that will be the subject of continual improvement.We have certainly covered all the major issues with our two year enhancement program, but logistics will now be the focus of ongoing scrutiny and upgrade with one objective being to continually set the industry standard for such things as on time delivery and delivery accuracy." "We also know that the PULSE WMS can be utilised to do more for us than at present. And so we are working closely with PULSE to review these further options and to recommend other system facilities and features."