Clipper Distributing Company: A Warehouse Management Case Study
Animal pharmaceutical distributor selects Accellos One Warehouse to gain efficiency, productivity and maintain growth
St. Joseph, MO — May 21, 2009 — Price pressure on suppliers has been intensifying for some time in the livestock industry as industrialization continues apace. In the mid-1980s a group of regional animal health product distributors responded to this pressure and joined to form Phoenix Pharmaceuticals, Inc. They reasoned that the buying power they could leverage as a group would generate better pricing from their own sources and enable them to sustain profitability.
The group also sponsored and won federal legislation to allow development of generic products, not then available, and launch a company to manufacture them. Double-digit annual growth followed.
Changing Direction
Fast forward, 15 years: The profitability squeeze imposed by the large animal trade endures, and market opportunities are diminishing. Conversely, an area of the animal health field not losing but actually gaining ground is the pet or companion animal sector.
Again demonstrating their resiliency, members of the Phoenix group formed Clipper Distributing Company LLC to channel generic and branded products to distributors and wholesalers addressing the pet market.
“Some of the people that started the company recognized that if they were going to grow, they had to play in a growth market,” said Brandon McKibben, Clipper chief financial officer. “The large animal market wasn’t it — larger, more commercialized farms were driving this toward a commodity business. With small animals, you’re back to dealing with injuries-averse consumers, and it is a much more viable market.”
The Company
Based in St. Joseph, Mo., privately owned Clipper found the principals for which it was looking. Like its predecessor, it has experienced double-digit annual growth both in revenue and in units sold virtually since start-up. Its small-animal focus accounts for 70-80 percent of sales, most of the balance in bovine and equine products such as antibiotics and fluid therapy products. Its product mix is strongly generic with over 1,400 products but also includes branded products from manufacturers such as Bausch & Lomb, Pfizer Animal Health and Abbott Laboratories.
The Clipper staff comprises 21 employees, 11 of whom are in the warehouse — a four-year-old, 37,000-square foot facility that is divided into three zones distinguished by their storage characteristics and picking requirements: pallet, case and carousel. The warehouse also has a refrigerated area, a flammable liquid storage room, and a secure space for narcotics and other controlled substances. The company serves about 10 distributors with single and multiple shipping points. Deliveries are broken out at these points and forwarded to smaller outlets for direct sale to customers, most often veterinarians.
The Situation
Until the installation of the Accellos One WMS software in January 2009, Clipper followed warehouse procedures developed at Phoenix Pharmaceuticals, unchanged in 20 years with the exception that they were now executed though a Microsoft Dynamics ERP (enterprise resource planning) system.
For inbound product, pallets were offloaded to a staging area on the warehouse floor. The pallets were inspected, the product was recorded on paper receiving documents, and the documents were taken to the office for input to the business and inventory systems for allocation to outbound customer orders.
Orders normally originated by fax and were keyed into the business system where they were matched to inventory. Pick tickets were created, printed and taken to the warehouse. When orders were completed, the pick ticket would indicate the quantity of each item and, because they dealt with pharmaceutical products, the lot number of each pick and the quantity of each lot number that was being picked.
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