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E-Tailer's Digest                                                                                         December, 1999

George Matyjewicz (10051 bytes)

George Matyjewicz
George Matyjewicz of
GAP Enterprises, a management and marketing "solutioning" firm, can be e-mailed at georgem(at)(at)gapent.com. He is the moderator of "E-Tailer’s Digest," an Internet retail discussion forum located at www.gapent.com/etailer/.

Keep the Goods Moving

There are a number of sources to turn to for help.

Whether yours is a brick-and-mortar, clicks-and-mortar, or virtual store, you need technology in order to manage your retail supply chain and process customer orders. Following are some useful ideas on the process, contributed by your trusty online experts at E-Tailer’s Digest.

The retail supply chain is the flow of merchandise from the manufacturer or distributor through the warehouse or distribution center to the customer. The faster you move the merchandise through the supply chain, the more profitable you become.

A survey reported in Gifts & Dec four years ago found that few retailers wanted to undertake bar coding due to the cost and the various technology issues. Yet those who institute bar coding systems receive a very fast payback. Bar coding a distribution center (even if that distribution center is the back of your store) is much easier than it used to be. For a simple bar code system, all you need is a bar code printer, a handheld scanner, and software to connect everything to your inventory management system. The cost for such a system should be under $5,000. If you want a system with a portable data terminal, the cost will be closer to $10,000.

A North-South Example

One of our clients is a textile converter with corporate offices in New York City and a production and warehouse facility in South Carolina. We were called in to study ways to improve the management of their retail supply chain, and to determine how changes would impact workflow. The client used an IBM AS400 computer in New York to handle all the order processing, inventory control, and accounting functions. A telephone connection allowed a printer in the South Carolina facility to print out orders.

After reviewing the operations, we determined that a system installed in South Carolina should track the both the shipping and receiving of goods. It wouldn’t have to maintain the inventory, since the New York AS400 was responsible for that. We engaged American Computer Solutions (ACS) in Alpharetta, Georgia, (www.gapent.com/acs/) to install a bar coding system in the South Carolina distribution center. Jerry Grooms, the project manager from ACS, recommended a radio-frequency-controlled system with eight portable data terminals (PDTs), four portable bar code printers, and a high speed bar code printer, all communicating with a dedicated server linked to a server that controlled the applications.

With the new system in place, New York transmits orders every night. They are printed and processed in South Carolina, and then sent via modem to update the inventory records on the AS400 in New York. In South Carolina, a report on the goods expected to arrive during the week is printed out so that the warehouse manager can plan and staff adequately.

As merchandise is received, it is scanned into the PDTs, and a bar code label is printed on one of the portable printers. The merchandise is then moved to bins, where the label and bin locations are scanned. Customer orders and production orders are printed as needed. Each step of the process is immediately available on the office computer, so that anyone who needs to can see the status of the cycle and where merchandise is located at any given time.

“This is not your normal warehouse management solution, where you receive, put it away, … pick and ship product,” Grooms explained. “New York must export purchase orders for receiving, customer orders for picking and shipping, and production orders for special requests (most of the company’s business). In return, the plant in South Carolina must export to the New York AS400 receipts for purchase orders and shipment information about customer orders. And they need the ability to move goods from one bin location to another, allowing goods to be cut from rolls.”

During the installation, weekly progress meetings were critical, since so many factors were involved: the software changes in New York, the new system in South Carolina, the staff retraining, the coordination with vendors, and, last but not least, the “we used to do it this way” issues. What made the implementation successful was that management and staff “bought into” the changes, while adhering to the company president’s rule for the transition: “Nothing stops shipping!”

The Help Desk

Depending on where a retailer is in the decision-making process, there are different sources to turn to for help in dealing with retail supply chain management. If you are in the beginning stages and just beginning to seek information, you can contact bar code companies like Symbol Technologies in Holtsville, New York, or Percon Eugene, Oregon. If you are ready to proceed, you might want to contact someone who has gone through the process before ¾ a fellow retailer, perhaps ¾ or take it up with your accounting firm’s management advisory services (MAS) department. You might also turn to professional retail consultants.

You can also look to the Internet for ideas. One of the best sources is Art Avery’s e-logistics 101 at www.elogistics101.com. There you will find articles, resources, and forums dealing with logistic issues, especially those involving e-commerce. Art is a frequent contributor to our E-Tailer’s Digest discussion list.

Fulfillment Houses

As online sales continue to grow, successful e-tailers offering expanded product selections will need to move a large volume of small parcels while at the same time meeting rising customer expectations. Fulfillment houses like Fingerhut and Valley Media serve the largest e-commerce sites. But what about smaller e-tailers? Where can they turn to for order fulfillment? While a number of small, local warehouses have dipped their toes into the vast Internet ocean, not many inspire confidence.

We recently found a fulfillment service that looks promising: Netship (www.netship.com). Two years ago, entrepreneur Dave Campbell took a fresh look at his successful but traditional franchise network of 120 pack-and-ship stores, and he envisioned an innovative distribution system for online retailers. His complete, integrated inventory management and fulfillment service now targets small and medium-sized wholesalers and retailers. The service utilizes a nationwide affiliate network of more than 400 retail pack-and-ship centers.

In this fast-paced and fast-changing e-commerce world, there are some excellent resources that can help small and medium-sized retailers compete with the 800-pound gorillas. Remember, on the Internet everyone is the same size — the size of a monitor. n

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GEORGE MATYJEWICZ is Chief Marketing Officer and a Partner at GAP Enterprises, Ltd. a management and marketing Solutioning ™ firm that assists retailers. He is a veteran of the Internet and the computer field, as well as a former retailer and the moderator of E-Tailer's Digest.  Matyjewicz can be reached at (201) 939-8533 Ext 821 or e-mail to georgem(at)gapent.com or write to him c/o G&DA, 345 Hudson Street,  New York, NY 10014