It may seem a bit ironic in view of the corporate name, but logistics professionals at Borders will tell you that what sets us apart in our industry is our ability to leap boundaries. Achieving our corporate vision of excellence in supply chain management requires reaching out and acting as ambassadors beyond our scope of responsibilities. That includes looking at internal links in the supply chain to find ways to make our internal customers more effective and efficient.
When I joined Borders in 1999, our big challenge was to integrate the logistics function with our corporate business operating groups. Some of the first projects followed the traditional path—setting logistics scorecard metrics, developing a finance-oriented transportation group, establishing a new supply chain management function. But once those were in place, we felt there was still more to do.
Because book and music retailing are time-sensitive industries,we began with a study of how long it took us to receive an item and have it available for the customer. Being the first to offer a new title is important: If we don't have what the customer is looking for, that customer will shop elsewhere. Our goal was to make certain that our supply chain network could get products into our stores in time for market-release dates.
First, we looked within the DC to determine which of our internal processes might be contributing to delays. We developed action plans to reduce existing backlogs of product, with par ticular focus on the critical holiday periods. Second, we worked closely with our merchandising group to set up internal processing time standards for the various product order types. The teamwork with our buying group enabled us to minimize backlogs and to smooth out product flow in the critical third and fourth quarters.
This initiative led us to examine another area that some companies might overlook. After the products arrived in the store, they had to be placed on the shelf. Was our current process working? Could it be better? Our distribution engineering group and our store operations group took up these questions.
After spending several months mapping the current store truck-to-floor process, our engineers found that approximately 60 percent of the associates' time in the store involved handling product—receiving shipments in the backroom, placing product on the store sales shelf or managing returns—and that these processes were not standardized, let alone optimized. The engineers felt that the company could save a lot of time by making the process easier and uniform across each of the retail stores. And if the associates were freed from backroom duties, they could spend more time helping customers and increasing sales.
Together the engineers and store operators set up a cross-functional supply chain team to manage the initiative. The team members worked closely together and tested several methods in retail stores across the country. Once the best method was agreed upon, we selected high-, medium- and low volume pilot stores to test the process.
The engineers were right: With the new engineered process, we could reduce handling time and move product from the backroom to the floor within 12 hours. Our groups documented the processes, set up meetings with essential field store management leaders and made final presentations, featuring testimonials from the pilot stores' associates. Training modules were established and roll out schedules were developed to launch chain-wide. At the annual store managers' meeting, members of the supply chain team led breakout sessions devoted to sharing best practices from the pilot stores. The new process also resulted in a human resource structural change that aligned associates into two teams, one for inventory process and the other for customer service. This division of responsibility significantly improved morale, lowered absenteeism and improved labor efficiency, resulting in more time availa ble to support customers.
What lessons did we learn from this endeavor? Here are a few:
- Time wasted is waste, regardless of where it's located in the supply chain. For the company to be effective, time waste must be eliminated.
- Sometimes it pays to take a risk. We invested time in the truck-to-floor processing study. This may not be the traditional domain of logistics, but we had a lot to offer the company. Our payoff came not only from reduced costs and improved service, but also in credibility with our executive group.
- Learn the language of your peers. Some speak accounting or marketing, others speak finance. To be successful in spanning the boundaries in most organizations today, we must be fluent in all languages. This also means avoiding the temptation to toss around supply chain terms without an interpreter.
- Regardless of your corporate strategy, make cost reduction a core competency. Our vision is to provide world-class customer service to both internal and external customers, but we must be able to do this efficiently.
- Learn the art of balance. We're currently in the process of upgrading our entire operating system. Sometimes companies put all of their energy into the newest technology to the detriment of the nuts and bolts of the business. Learning to balance out the demands of developing a new system while at the same time steering the supply chain takes some skill.
What's ahead for Borders? Obviously, a great deal of change, as the company continues its international expansion in the United Kingdom and the Pacific Rim and further develops business in North America. Our logistics professionals will see new challenges and opportunities in the coming months—and lots of chances to practice leaping boundaries.
