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David Rizzo

Quality Insider

Sur La Table Boosts Operational Efficiency

Scalable supply chain execution system delivers labor savings, accuracy improvement, increase in space utilization, and monthly overhead reductions.

Published: Tuesday, April 20, 2010 - 09:30

With the dawn of the new decade, retailers throughout the world are realizing the profit potential of going beyond their main channel of distribution and making products available through additional channels outside of their core competency. Overcoming the challenge of merging these different fulfillment channels—web, catalog, and brick-and-mortar—are the latest set of supply chain execution systems that create operational efficiencies via a single inventory process. The improved speed, accuracy, and ease of scalability of these systems yield significant cost savings and opportunities for business growth that can benefit any retailer of any size.

In the case of retailer Sur La Table—which operates 76 stores throughout the United States, as well as selling via catalog and the internet—its new supply chain execution system yielded accuracy improvement to 99.53 percent, a 20-percent increase in space utilization, and monthly reductions of $5,000 in energy costs and $2,000 in lift equipment rental fees.

Labor savings amounted to 18 percent with the new system. Given Sur La Table’s warehouse head count of 155 nonpeak employees and 300 peak employees, calculated efficiency gains after system implementation range between 34 and 66 full-time exempt staff.

The need for improvement

Founded in Seattle, Washington, in 1995, Sur La Table positions itself as “providing the inspiration, tools, and techniques for those who wish to enhance their lives through creative cooking and artful entertaining.” Sur La Table’s comprehensive selection of products includes tools from around the world to prepare any cuisine, as well as beautiful dishes, linens, and glasses.

“We run all the distribution from this single warehouse in Brownsburg, Indiana,” says Tom Rafferty, the distribution center manager for Sur La Table. “We not only supply our brick-and-mortar stores out of this site, but we also handle the direct-to-customer e-commerce and catalog fulfillment.”

Up until mid-2008, this undertaking was easier said than done. Part of their challenge lies in supporting extremes in order size, numbering in the hundreds of items for any of the firm’s stores, to only a few or even one item for its catalog or e-commerce businesses.

“The old system dated back to the late 1980s and early 1990s, and ran on an AS400-based system that lacked RF [radio frequency] or hand-held technology,” recalls Rafferty. “We were picking orders off of paper pick sheets. None of the inventory transactions such as put-away and replenishment were in real time. When we shipped to an individual store, all we knew was that we had ‘X’ amount of units on so many pallets. We didn’t have any information that was specific to the pallet, let alone to the carton.”

Concerned about improving productivity and efficiency as the company grew, Rafferty and his team started aggressively seeking a modern warehouse management system in 2007.
Rafferty’s team looked at a top-tier system, a couple of mid-tier systems, and some tier-three systems before choosing Warehouse Librarian, which had the total cost of ownership of a mid-range system but with the functionality of the bigger systems. “One of the draws for us was that buying Warehouse Librarian was like buying Excel,” says Rafferty. “You purchase it off-the-shelf and you can use it right away without any heavy modification.”

A product of Snoqualmie, Washington-based Intek Integration Technologies Inc.—with 23 years of experience in warehouse management and automation control—Warehouse Librarian is a scalable, PC-based supply chain execution and warehouse control system.

Sur La Table went “live” with the new system during the last week of July 2008 with an incredibly fast and easy transition. 

“We went off our old system on Friday, and on Monday we were operating the new one,” Rafferty recalls. “By the end of that first week we had done all of the normal business that was slated for that week. We didn’t have to phase it in, and training went smoothly.”

Operating on a network of Windows-based PCs, the new system was integrated with 75 Symbol RF hand-held scanners and five internally-designed mobile carts—essentially PCs on wheels.

Success in practice

With the integration of the new system, Sur La Table no longer had to run two parallel inventories.

“Merging our inventories was huge in terms of productivity gains,” Rafferty says. “We used to have to transfer goods back and forth. Now, since we’re picking both ‘live’ from the same slot we can make inventory immediately available to both the retail store and the direct customer channels. In conjunction with our host system, we can reserve product for the direct customer, so that we don’t completely deplete it while fulfilling retail demand. As a result, we’ve gotten about an 18-percent improvement on a cost-per-unit basis.”

Gains from merging the two inventories also extended to space utilization.

“One of the biggest improvements came from the way we utilize slots,” Rafferty notes. “We were 20 percent busier through the peak period in 2009, and we did this with the same footprint as last year before we got the new system. It’s hard to put a number on how it’s helped us capacity-wise, but you could argue that we gained 20 percent in capacity because of the more efficient utilization of our slots.”

 

With the integration of Intek's Warehouse Librarian, Sur La Table was able to merge inventories for their brick-and-mortar and direct divisions, resulting in huge productivity gains.

 

Rafferty also points to improved accuracy.

“The product that we thought was in the building, was not only in the building, but in the right location,” Rafferty continues. “That improved from 98.39 percent to 99.53 percent, which may not sound like much, but in terms of inventory accuracy, that’s pretty significant.

“In addition, picking with RF gave us better user accountability,” Rafferty adds. “We are also able to track perishable product by expiration date now. We couldn’t do that with the old system.”

Sur La Table also realized some hard dollar savings.

“We rent our warehouse lift equipment, and this year we could rent fewer lifts to get through the peak period,” Rafferty says. “Over a six-month period we saved $12,000 in forklift rental costs.

“Before, we typically would run three shifts, 24 hours a day, five days a week, all year long,” Rafferty continues. “But now, during nonpeak periods, the building is only open for 12 hours a day, five days a week. By not having to light and heat the building as much, our utility costs dropped by about $60,000 this year.”

Easier access to information also accounted for much of the gains.

“In the past, we would write queries on the AS400 system, but now we use Crystal Reports to get info out of Warehouse Librarian,” Rafferty says. “It’s more user-friendly in terms of being able to pull several different files together from not only the warehouse system but also our host system.

“In terms of the way we service the stores, they get much better information now,” Rafferty continues. “Each pallet has its own barcode ID, and each carton on that pallet has a barcode ID that links it to the pallet; and since each store gets a manifest with every shipment, they know exactly what they’re getting on each pallet.”

Modular in nature, the new system can help Sur La Table continue to expand in the new decade.

“In a nutshell, the new system allowed us to benefit by joining two inventories into one,” Rafferty says. “As the business grows, we can add more RF units and more users to what we’ve already got.

For more information contact Intek Integration Technologies, visit the web site at www.intek.com.

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About The Author

David Rizzo’s picture

David Rizzo

David Rizzo, D.P.M., writes technical articles for Power PR, based in Torrance, Calif. He has written two trade books, 150 technical articles, and 400 newspaper columns.