- Overall costs reduced by $25,000 per month on average
- 2009 total savings of nearly $435,000 – a 132.2% return on investment in single year
- Inventory accuracy increased from 96% in 2006 to 98.978% in 2009; cost dropped from $60k to $15k; time dropped from 5 days to 1.5 days; periodic cycle counts eliminated
- On total 2009 inventory valuation of $6,157,684, negative variance was only $1,345.00
Management at the Ann Arbor, Michigan scrapbook, craft and hobby products company Colorbök, Inc. were at a critical decision point in early 2008 as they contemplated the increasing costs and complexity of the business. The company designs and specifies products in Michigan for manufacture by various sources in China and import to the U.S.
A key element became the acquisition of a warehouse management system that could integrate readily with the company’s Microsoft Dynamics GP ERP software to eliminate cumbersome paper-based processes and streamline distribution center operations. Under the leadership of IT Director Scott Genereaux, Colorbök selected AccellosOne Warehouse, immediately impacting virtually all aspects of its warehousing operations and quickly generating operating cost savings.
CREATIVITY AND COMMERCE
Colorbök originated in 1984 with the introduction of Alpha Notes, notepads that were die-cut into alphabet shapes. The product became an instant success and Colorbök quickly won a reputation as a stationery company noted for originality, innovation and creativity. Building on that early success, the company’s sales have continued to grow tremendously in both proprietary product lines such as Cloud 9 Design, Heidi Grace Design, and well-recognized licensed brands such as Crayola, Peanuts, Laura Ashley and Build-A-Bear.
DESIGN AND PRODUCTION
Typically, everything begins with the 30-member design staff in Ann Arbor, where the focus is on developing and designing “products that people actually want to buy,” according to IT Director Genereaux. The product development process is an ongoing one with frequent new product launches and a constant rotation of new items in and old items out, creating a challenging SKU-tracking process. For example, the 2008 inventory count showed some 6,800 SKUs, while the 2009 count dropped to a little over 4,000.
NEED FOR A NEW SOLUTION
Pre-Accellos, the Rancho Cucamonga warehouse was loosely zoned and merchandise was put away on a space-available basis. Every activity was performed with paper forms, usually commencing with the inbound receiving documents being matched to Excel based tracking documents. Records were hand-keyed into the software. Pick lists and labels were manually printed and distributed. Besides the delays and error possibilities endemic to paper-driven processes, personnel requirements were high and costs continued to mount.
“We had established the California distribution center in 2005 and achieved major efficiencies in doing so,” Genereaux says. “But now we were taking a second look. It became apparent that we had a lot of built-in costs that were severely impacting our customer service and profitability.”
AccellosOne WMS is a scalable and flexible real-time warehouse management software system that streamlines operations and inventory management through the use of automated paper-free processes and radio frequency (RF) communications. With these technologies, it tracks stock into, out of and within warehouses, streamlining and verifying processes with each movement.
Colorbök deploys a battery of as many as 35 wireless handheld scanners in the distribution center. These scanners communicate remotely with the Accellos One Warehouse inventory files at the Ann Arbor host site, continuously sending and receiving new information with each transaction.
PICKING AND SHIPPING
Supervisors first allocate the product to be picked in AccellosOne Warehouse and then instruct the software to wave the orders. The software will not execute the wave if it cannot confirm that product is actually in one or more pickable bins, and if it is not, an automatic replenishment order is generated to allow inventory personal to replenish picking bins using the RF terminals.
From go-live in October 2008, the impact of the new warehouse management software was swift. No impact was recorded in October, but strong positive signals emerged in November and December showed hard savings of almost $21,000. Within a few weeks after the first realized savings, Colorbök President and CEO Chuck McGonigle shared monthly tracking results with the board of directors: “On average we are enjoying a $25,000 monthly reduction in costs,” he stated. “In 2007 CALRC (the California facility) head-count peaked at 115 people. Today we have 48 hourly workers in CALRC and Kit Christensen, Director of Distribution, has been challenged this year not to increase above 60 people during peak shipping months.”
“This has been a hugely successful undertaking,” Genereaux says, “and it is one that will continue to support profitability for the company for many years to come.”