Challenges of Multichannel Fulfillment

Richard Eaton, vice president, fulfillment services of Highlights for Children, and Tom Kirkham, senior consultant for ESYNC International, spoke to Catalog Success a few weeks before Highlights planned to go live with a new warehouse management system (WMS).

Like many catalogers, Highlights for Children’s product-fulfillment operation contends with several distribution channels and myriad product types. Highlights’ in-house distribution center handles fulfillment for three divisions:

- Highlights Catalog, a traditional children’s products catalog;

- Highlights Jigsaw, an educational toy and book supplier offering products through home parties similar to the Tupperware model; and

- a third division that sells business-to-business (b-to-b) educational products.

(Fulfillment for the Highlights for Children magazine is done at a separate location.)

As is the case for many distribution operations, Highlights must deal with different product types and packing configurations, as well as widely differing order cycles. The b-to-b division ships primarily books, a straightforward product that can be packed and shipped using a standard set of carton sizes. Highlights Catalog, on the other hand, sells everything from books to games to pogo sticks. The company’s new WMS had to be able to integrate well with all three divisions, as well as its other in-house accounting and manifest systems. In all, the new system had to interface with five other existing systems.

Time to Make a Change

Highlights had been operating on a home-grown system since 1992. But in 2000 executives recognized their operation would outgrow the system in as little as two years. Says Eaton, “Our DOS-based system quickly was becoming inadequate. We were experiencing frequent system slowdowns and lockups due to high processing volumes.”

Eaton says Highlights originally considered rewriting the current software with similar functionality on a more robust platform. But after looking at the particulars of its expanding and complex fulfillment operation, he says, “It became clear that solution would not meet our needs long term.”

Before deciding to buy a new system, executives conducted an internal evaluation to determine the feasibility and associated costs of developing in-house a new system with advanced functionality. “It was determined that an internally developed system didn’t make good business sense,” says Eaton.

On the catalog side, improved system reliability and reduced operating costs were two primary goals. Continuing its high order-accuracy rate, and perhaps even improving on it, was another goal. The Highlights catalog stocks myriad products and already achieves about 98-percent accuracy on its orders, thanks to a system of double and random checks. An enhanced WMS would enable Highlights to move past purely manual accuracy verification to automated order weight verification. “We’d be able to tell by weighing a package before it ships if it’s at the

projected weight based on the products ordered,” Eaton explains.

A New Solution

Once Highlights decided to buy a system, they hired ESYNC, an operations consulting firm that specializes in systems integration, to help them select the right system. Highlights purchased Manhattan Associates’ PkMS Warehouse Management System software in conjunction with a Manifesting application from Kewill.

ESYNC devised a project roadmap for Highlights’ staff to implement the system. Highlights started the process using only internal resources. But after several months, things weren’t progressing as anticipated. The staff grew concerned about the implementation target date, says ESYNC’s Tom Kirkham, project manager for program.

Eaton says, “The data was starting to slip; we weren’t going to meet our schedule. Those were the tough days; we had released ESYNC and decided to do it with internal resources. We clearly underestimated what was involved in implementing such a complex system. We simply didn’t have the expertise in-house.”

Project Back on Track

Highlights turned to ESYNC for advice on getting the project back on track to meet the implementation deadline of March 1, 2002. “We had ESYNC do a two-week assessment to determine where we really were in the implementation process. We asked them: ‘Are we indeed in trouble of not meeting the implementation deadline?’ They said, ‘Yes,’” recalls Eaton.

Highlights officials decided to bring ESYNC back into the loop. Kirkham came on site at Highlights last June to take over the project’s management. A more formal project plan was developed, and committees were formed that included senior management. Highlights continued to use its own internal IT staffers for interface development, network issues and quality assurance functions. ESYNC provided the project management and WMS implementation expertise.

Once the parameters were established, Kirkham developed an updated path for the project. “It involved looking at their host systems, and what information comes down manually vs. automatically,” he explains. “Then we went down the line to match their existing process flows against the flows of the new WMS.”

A testing phase followed. “We did the testing in several phases,” says Kirkham, to ensure inventory, ship dates and picking information all were being generated correctly. Test results were “above expectations,” he adds. Next came a user-acceptance test in the warehouse. “We shut down the system, downloaded a day’s orders and had the warehouse staff actually go and pick them.”

At press time, Highlights was in the final countdown. Kirkham and Eaton were hopeful the changeover would happen without a hitch. When the new WMS goes live, Eaton looks for three primary benefits:

1. A stable, reliable system that will grow with the company, including a chance to see cost savings.

“The new system will allow us to pick directly into the final shipping container vs. using a tub and then transferring the product to the shipping container,” says Eaton.

2. Higher accuracy rates. “We would like to see numbers over 99 percent,” Eaton says.

3. Continuous inventory verification through cycle counts vs. the more traditional annual inventory.

Kirkham adds, “Highlights will spend nearly a million dollars on the project when all is said and done. But with ever-increasing customer demands for higher service levels and the ever-present pressure to operate at lower costs, the new system should bring big rewards to Highlights.”