By Ken Schwarz
Oregon is a control state with the exclusive right to sell packaged distilled spirits. The Oregon Liquor Control Commission (OLCC) ensures that only qualified people and businesses are licensed to sell and serve alcoholic beverages. Through the Distilled Spirits Program, the OLCC regulates the sale of bottled distilled spirits while producing revenue in support of state and local government. The program centrally purchases, warehouses and distributes distilled spirits to Oregon’s 243 liquor retailers.
With 1,400 regular items in stock at any one time and close to three million cases anticipated to ship in one year, the OLCC maintains a streamlined and efficient warehouse using RIMS, an inventory management system developed by Progress Application Partner Robocom. But that was not always the case according to Bill Mallon, wholesale operations manager for the OLCC: “Prior to implementing RIMS, we really didn’t have a system – everything was essentially paper-based or in people’s heads.”
The company was using a 40-year-old COBOL system to receive orders from its 243 agents and to hold inventory. Orders had to be printed up and sent out by paper and then assigned to an agent’s account. “We would pick what we could, send back paper adjustments, and then they would have to make adjustments and send that information back to us. The entire process was essentially manual,” explains Mallon.
Visibility into inventory was also a major issue. “As far as that system knew, every item in our warehouse had one location where it was stored,” Mallon says. “But in reality we would have that item in two or three places. Things were just getting scattered, and we had no real control or visibility into our inventory.”
This lack of organization, visibility and efficiency had a negative impact on the business in multiple ways. One major issue, according to Mallon, was an inefficient use of warehouse space. “We had a lot of big, deep locations that would hold 12 pallets. We had gone over to a system called bailment where the vendors actually own what is in our warehouse. So a lot of them started doing vendor managed inventory where they were keeping track of how much was in our warehouse. The process became a little closer to just-in-time (JIT), where they would have just a couple of weeks supply. The issue was that these big, deep locations were meant to hold a couple months worth instead of a couple of weeks. So we had a lot of space that was assigned to an item that wasn’t being utilized.”
The inefficient use of space also affected the organization’s ability to organize and locate inventory, fulfill orders on time and meet its standards for customer satisfaction. “Our product line was in the beginning of an expansion period that still continues to this day,” says Mallon.
For example, many types of liquor now come in multiple flavors, and each one of those needs a location to be stored in and picked from. To accommodate this growth, the organization required more individual spaces to store inventory, but instead it had huge spaces that were being underutilized. The warehouse was also extremely crowded, and employees had difficulty finding and tracking inventory. “We were reaching the point where we were going to start shipping orders incomplete because we were not able to get items to the pick locations in time to meet the shipments,” Mallon says.
It was clear something had to be done – the warehouse operation could no longer scale with rising customer and market demand. “I was losing sleep,” says Mallon. “We were spending a lot of time looking for things. There was a pretty high cost; I had two to three employees that were spending all of their time looking for the stuff. And other people were picking up their work. So the work level had increased dramatically for everybody, but we weren’t seeing any increased productivity and, in fact, we were losing opportunity.”
Enabling Dramatic Changes