At first the shouts coming out of AOL Time Warner's New York headquarters were cries of joy. Back in the dark days of 2001, executives had taken a big leap of faith, signing off on a plan that carried the distinct smell of risk. To be precise, they had OKed the launch of Southern Living at Home (SLAH), an offshoot of Southern Living home and garden magazine, whose business model depended, improbably enough, on selling home décor items—firescreens, Tuscan olive jars, plant stands, aromatherapy candles—at home parties. Hardly the route to mass-market success, you might think. Except surprisingly enough, it was. In just three years' time, SLAH's sales zoomed to $120 million.
But all too soon those shouts of joy turned into something that sounded more like lamentations. SLAH was fast becoming a victim of its own success. True, orders were rolling into the fulfillment center in torrents—to the tune of over 10,000 a day. But they were rolling out in a trickle. Despite workers' best efforts, the order fulfillment house SLAH had hired simply couldn't keep up with the volume. Leadtimes climbed to three or four weeks, and the call center's capabilities were becoming more strained by the day.
At first, Southern Living At Home and Custom Marketing Services—the third-party fulfillment provider it had hired—simply threw labor at the problem. The workforce eventually swelled to 375 warehouse pickers, who rushed through the aisles pushing more than 275 shopping carts and running 76 packing tables. For a while, that worked. "We got to the point where we could do 3,000 packages a day using our manual pick-pack process," says Butch Bell, vice president of operations at Southern Living At Home. But as SLAH's sales skyrocketed, it became clear that manual fulfillment wouldn't cut it; the time to automate had come.
Making their move
It was at that point that Southern Living At Home and Custom Marketing Services called in outside help—in this case, systems integrator Forte. What was needed, the three parties agreed, was a new automated, open-ended and highly configurable facility. The decision was made to move fulfillment operations to a new 500,000-square-foot distribution center owned by Custom Marketing just outside of Birmingham, Ala. Forte would be in charge of equipment procurement, WMS integration, project management and employee training. In less than six months, the new, highly automated facility was up and running; the first shipment was ushered out the doors in May 2003.
Because SLAH's business is highly seasonal—sales spike around the holidays and in the weeks following the publication of its twice-yearly catalogs—Forte designed a scalable system with an emphasis on flexibility. The center houses four identical two-level pick modules, which Custom Marketing can enable or disable depending on demand. Under normal circumstances, two modules are used. Southern Living uses all four modules during peak season (September through December) to handle the 14,000-plus orders it ships daily at that time of year.
For many of the same reasons, the center was outfitted with pick-to-light, rather than radio frequency (RF), technology. (The three parties agreed that RF wouldn't be cost effective given the seasonal fluctuations in staffing.) As it turned out, the pick-to-light system—made by Lightning Pick—has provided the flexibility SLAH needs. For one thing, very little training is required to get workers up to speed. It also makes it easy to shift staffing within a picking module so that plenty of help is available wherever demand is highest.
Follow that order!
Today, the typical order arrives electronically, placed by one of the more than 25,000 independent sales consultants who serve as liaisons between the company and the party hosts. SLAH's sophisticated ordering program gives consultants the option of placing an order right away or electing to have it held in queue for several days to allow party hosts to collect additional orders. Once the order is released, it drops into the WMS (WM for Windows from Manhattan Associates), which generates a pick list.
Guided by the pick-to-light beacons, workers start picking product to totes with shipping labels attached. The automated conveyor system uses in-line scanners that sort the totes to a quality assurance or packing area as directed by Southern Living's WMS. All the while, a warehouse control system (Forte's DC Automation Director) that links the WMS and the material handling system processes, reports and tracks cartons as they move throughout the facility.
Following the pick-pack process, cartons are conveyed to a station where dunnage is added. Next, conveyors transport the cartons to an in-line scale and shipping sorter. The scan and weighing system sends info on the box's cumulative weight to the WMS, which simultaneously calculates what the weight should be based on data that's been preloaded into the system for each product. The system takes this information and sends it on to the automation director, which determines whether to pass or divert the carton. If the carton's weight falls outside the expected tolerances, it's diverted to a shipping quality control area. If it's within tolerances, it's diverted to one of six parcel zone destinations and updated to a manifested status. From there, FedEx takes over, delivering all of SLAH's products to their destinations. When the delivery's complete, FedEx, whose systems are tied into SLAH's billing system, automatically provides the company with a proof of delivery.
Faster, better, cheaper
A year after the high-tech DC's opening, Bell can reel off a whole list of benefits. "The automated system has brought us some great cost savings," he says. "But the big thing was the added capacity to ship product."
Another benefit has been a noticeable improvement in quality."Under the old system we were experiencing quite a few mispicks—either missing items or wrong quantities," Bell reports. "But now—thanks to quality control checks both after the picking process and after the packing process—we've achieved around 99.5-percent picking accuracy. When it comes to quality now, the difference is night and day."
Then there are the labor savings. Productivity has increased by more than 30 percent. Southern Living at Home has seen a reduction in order cycle time of 15 percent or more, and automation increased throughput by over 100 percent without the need to add staff at the distribution center. Today, products generally ship in five days—not three or four weeks—although they often go out the door in the first 36 hours after the order is received.
So far so good, but what happens if growth continues to barrel ahead? SLAH expects throughput to increase 500 percent over the next three years. And that may be a conservative estimate. As Jerry Vink, vice president of engineering for Forte, dryly points out: "They continue to set records when it comes to their ability to break their own sales forecasts."
Actually, the company's already mulling over its options. Southern Living's Bell says the company is currently evaluating the need for another distribution center, possibly in the Northeast or West. A decision is expected this fall.
But that may not be necessary, at least for a while. Vink explains that when Forte's engineers designed the new DC, they deliberately built in capacity for future growth. "We've allowed for additional pick modules to be constructed, and we can double the size of pick modules and packaging areas," he reports. "We have a number of dock doors available with extra sortation equipment so we can increase shipping capacity at any time. The current system's useful life is dependent on their ultimate growth rate. But we've built in modifications and changes that can handle their growth down the road."
