STORES Magazine - February 2009 - (Page 38)

NUTS AND BOLTS / INVENTORY SYSTEMS tory was a leap of faith for a company that began using computers only 11 years earlier. McLendon Hardware moves approximately 45 percent of inventory from its DCs to its stores. With its former, paperbased warehouse management protocol – owing as much to gut feelings for replenishment as anything – the chain would not be able to account for as many as three million items at any given time – items that “were just sitting around somewhere,” McLendon says. The typical fear was that the company would run out of stock, so under the former system it would just order more product. That meant more inventory always was on hand than was needed, and turnover occurred too slowly. That led to space problems in the warehouse that made precise inventory counts impossible, distorting inventory value. “Before the warehouse system, we didn’t worry about keeping accurate inventory,” McLendon says. “We’d have a list the store would generate and send to us via fax. We would take that order and we would split it up among all our guys and they would walk down the aisles looking for these things. The store would ask for four and we would give them six.” Works with existing system PathGuide’s Latitude system provides real-time online information about inventory, automating operations that include receiving, order picking, manifesting, put-away and truck route/stop management. The system integrates with the company’s ERP network. In consigning inventory, the Latitude system uses portable radio frequency terminals to pinpoint the location of specific items within a warehouse or distribution center, integrating with conveyor sorting systems. The software operates on an open architecture that can 38 STORES / FEBRUARY 2009 be reconfigured to meet business needs and emerging operating systems. A cycle counting module can develop schedules to verify that item quantities are accounted for. The module selects subsets of inventory and by counting them on a frequent basis, operations can continue unimpeded and misplaced items can be identified quickly. Since deployment, McLendon Hardware has seen picking rates within the DCs increase by 50 percent and inven- tory accuracy improve from 65 percent to better than 90 percent. The company also was able to reduce its inventory level from 21 million to 18 million items. Inventory deficiencies often mean store shelves go unstocked, resulting in the potential for lost business. Just as bad, expectations are reduced when a customer cannot find the product he needs, says Eric Allais, president of PathGuide Technologies. “It puts that idea in their head that says, ‘Is it worth me stopping again at that store when they were not able to provide me with what I really came for?’” Working in conjunction with ERP, warehouse fulfillment is able to monitor shelf levels and generate automated orders. Warehouse productivity Features of the Latitude system, which include the automated printing of carrier shipping labels and documentation, are designed to enhance warehouse productivity in addition to inventory management. “If a retailer owns its own distribution center, it’s all about productivity and efficiencies and what can they really bring to the bottom line,” Allais says. They can add people all day long in terms of checkers and people checking the checkers. But over time, that really wreaks havoc on your margins and pretty soon you’ve got a clumsy situation.” McLendon knew the company was moving in the right direction when his 78-year-old father, Ted, who still comes to work every day, embraced the system. “He never used a computer in his life,” McLendon says. “He doesn’t use voice mail. He doesn’t have a cell phone. But we gave him one of these [radio frequency] guns; we trained him in one day, and he uses it day in and day out. I think that’s what finally got us to say this is the system that we can use.” Warehouse management will allow McLendon Hardware to keep slugging it out on the retail front with the big boxes while better serving its own niche in the market. “You can’t afford to be out of stock because it is a lost sale,” McLendon says. “That could be the reason the person never comes back. You want to build these relationships and you want to keep them. Some of our relationships are 50 years old. We’re trying to build new relationships that will last 50 years because that is what’s profitable.” StORES M.V. Greene is an independent writer and editor based in Owings Mills, Md., who covers business, technology and retail. WWW.STORES.ORG http://WWW.STORES.ORG

Table of Contents Feed for the Digital Edition of STORES Magazine - February 2009

STORES Magazine - February 2009 Contents Executive Editor's Page President's Page Are You a Pusher or a Puller? What Shoppers Think Online Retail Satisfaction 10 Things You May Have Missed Numbers Worth Counting Full Price/Markdown Retail People Cover Story - Something’s Got to Give First Look Concept2Watch Online Partners Merchandising Sustainability Inventory Systems Drug Store Systems Business Intelligence Inventory Managment Online Marketing Supply Chain - Better Data, Better Decisions Returns Management - Identifying Fraud Data Security - Securing Intimate Data Anti-Shoplifting - Mall of Shame? Risk Management - Securing Consumer Confidence Loeb Retail letter ARTS Update Point of View NRF News Retail Crossword Retail Industry Calendar End Cap

STORES Magazine - February 2009

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