2005 Supply & Demand Chain 100 Case Study  JMK/IIT / Integrated Warehousing Solutions

Profiles in Supply Chain Enablement: A hardware distributor increases productivity, reduces cycle time and balances service levels and inventory costs in its warehouse operations

Profiles in Supply Chain Enablement: A hardware distributor increases productivity, reduces cycle time and balances service levels and inventory costs in its warehouse operations

Company: JMK/IIT (Bridgeview, IL)
Company Size: Midsize
Company Sector: Distribution
Area(s) of Enablement: Fulfillment/Logistics
Enabler: Integrated Warehousing Solutions (Downers Grove, IL)

SDCE 100 2005Case Study: JMT/IIK, a hardware tools manufacturer for the do-it-yourself market operates a 175,000 sq. foot warehouse filled with more than 2,000 SKUs to stock the shelves of several of the nation's leading hardware store chains and independent retailers.

The company knew that its warehouse operation needed to be updated. Its archaic pull order system was driving up labor costs as more employees were required to accommodate the system's inefficiencies, while unreliable and outdated information exacerbated the number of errors. Mike Stengel, general manager, estimated that nearly one-half of the company's shipments had some level of issue, creating service failures that put JMT/IIK's relationship with its biggest customer at risk.

The situation came to a head over a unique partnership that JMT/IIK had with one of its largest customers to provide products in conjunction with promotional campaigns that took place several times throughout the year. This retailer would select certain products to appear in advertising circulars based on seasonal themes. Unfortunately, the delivery of these items was fraught with mistakes, and late or short shipments, the wrong models or the wrong tools meant missed revenue opportunities for the retailer at the critical time when a customer came in looking for a specific item.

As a result, the company put JMT/IIK on notice: fix it or we'll work with someone else. The customer gave JMT/IIK one last promotional campaign to turn the relationship around.

Proving the Concept

Two previous attempts to implement a warehouse management system had been stymied due to integration issues with the company's existing enterprise resource planning (ERP) system, instilling the team at JMT/IIK with more than a little skepticism. When Integrated Warehousing Solutions came in to pitch its solution to JMT/IIK, Stengel and his team raised the bar: prove that the offering will integrate with our existing ERP system, and then we'll talk longer-term. After a successful proof-of-concept, the system went live in just four months.

Integrated Warehousing Solutions' IRMS warehouse management system for JMT/IIK is built on a Linux platform, delivering integration with the company's ERP system. RF and barcode systems ensure that inventory is correctly logged upon receipt, stored in the right location and that levels are consistently updated and replenishment is automatically triggered before stock-outs occur. Employees are no longer spending time looking up inventory locations on the computer, only to go to the shelves to find that the information was out-of-date and the product was out-of-stock, leaving the order unfulfilled.

Reaping the Benefits

The results have been compelling: JMT/IIK exceeded expectations in the next promotional campaign with the retail customer. Subsequent campaigns were so successful that this customer has doubled the number of initiatives with JMT/IIK, adding an estimated $500,000 in new revenue opportunities for the retail distributor.

The completely paperless environment has increased efficiency, accuracy and reduced overall costs. More importantly, the number one goal for the solution was achieved: improving customer service levels. And unlike many distributors, JMT/IIK has been able to reach 99+ percent service without driving up costs. Cycle time for sales orders to shipment has gone from 72+ hours to less than 48 hours, even as the company's labor force has been reduced by 33 percent. Overall, JMT/IIK expects to recoup the entire cost of the implementation in less than 24 months.

Now that the distribution process has been streamlined and efficiency maximized, JMK/IIT plans towork with Integrated Warehousing Solutions to expand the collaborative nature of the system, adding messaging and alerting capabilities to external participants in the supply chain, including partners, suppliers and customers.

For more stories of successful supply chain implementations, read the "2005 Supply & Demand Chain Executive 100" article in the June/July 2005 issue of the magazine. Also watch the Today's Headlines section of SDCExec.com every Tuesday and Thursday for more in depth best practices drawn from this year's Supply & Demand Chain Executive 100.