From its well-known line of hair dryers and curling irons to its highend kitchen appliances, Conair has built a small empire selling tools designed to simplify consumers' daily grooming routines and household chores. Yet when it came to giving its own employees the tools they needed to do their jobs, Conair just recently emerged from the Dark Ages. Just 24 months ago, Conair's two DCs were a study in chaos, their aisles clogged with products that had been staged there as a last resort.
What had triggered the crisis was a dramatic change in its clients' ordering patterns. Customers like Wal-Mart, Target, and Bed, Bath, and Beyond, which had once been satisfied to receive pallet-loads of merchandise, had begun asking for smaller, more frequent shipments. As a result, Conair found itself shipping more and more cases of products each month.
Problem was, Conair's DCs weren't set up for high-volume case picking and shipping. In fact, they still relied on manual procedures whenever case-level picking and labeling were called for. Order selectors on forklift trucks would head out to pick merchandise from 55,000 pallet positions located throughout the facility. When they arrived back at the dock, the workers were handed stacks of labels. They then set to work manually separating pallets on the floor and applying the labels.
Before long, it became clear that manual procedures weren't going to cut it. "We have many, many customers and many ways we need to pick orders for them, and we recognized that our team of picking and shipping people couldn't do it in an orderly fashion any more," says John Mayorek, a senior vice president at Conair who's based at the company's 650,000-square-foot DC in East Windsor, N.J. "Our DC became cluttered, and our picking techniques fell behind some of the expectations we had for daily output."
By 2005, the New Jersey facility could no longer keep up with demand. Conair stood to lose millions due to severe operational bottlenecks that prevented it from meeting its customers' labeling requirements. "We were putting labels on by hand for every customer," Mayorek recalls. "In many instances, labels were put on the wrong side of a carton or the wrong way. Some bar-code labels were unreadable."
Worse yet, Conair was getting hit with costly charge-backs from its retail customers for failure to meet their requirements. And it was in danger of not being able to fill customer orders for the 2005 holiday season.
That's when Conair's executive team decided it was time for a makeover. They began to explore automation alternatives for the two DCs.
Clearing the aisles
Conair's first move was to call in OPSdesign Consulting to execute a two-week triage project. The consultant devised a quick fix for the New Jersey operation, which was essentially a matter of adding basic material handling equipment. The emergency solution brought immediate relief, increasing productivity from 70 cartons per hour per person to over 200.
With the most pressing problem resolved, the consultants turned their attention to a permanent fix. Working in conjunction with a cross-departmental team of Conair employees, they began the lengthy process of data collection and analysis. Months of data crunching, concept engineering, and comparative analysis followed, as the team considered numerous combinations of processes, systems, and infrastructure and labor elements. In the end, it came up with a plan for streamlining the labeling process and reengineering the order picking operation, with a goal of reducing travel distances and addressing the inefficiencies associated with picking orders one at a time from locations throughout the sprawling DC.
OPSdesign's recommendations included installing a 38-lane high-speed sortation system equipped with a scan tunnel array and four in-line print-and-apply machines in the East Windsor location as well as a scaled-back version at Conair's other distribution center, located in Glendale, Ariz. Bastian Material Handling installed the system, which went live in September 2006—just in time to get Conair through its peak shipping season. Now, pick-to-belt modules lead to a bank of automatic print-and-apply machines and subsequently to a high-speed shoe sortation system that directs outbound cartons to the shipping lanes.
The sortation system mechanically "slices and dices" the batch picks into individual orders and directs the cases to the appropriate shipping lanes. By integrating automatic printand- apply technology before the sort, the conveyor/sorter system has eliminated operational bottlenecks caused by the manual application of compliance shipping labels.
From Mayorek's point of view, the solution came in the nick of time. "I don't think we could have gotten through the massive orders of another peak season," he says. "I don't know how we'd have kept up with orders with just 40 or 50 guys picking orders on forklifts."
As for the project's results, the numbers speak for themselves. When the system was turned on, the company was shipping 20,000 cases a day on two shifts. Now, the company needs just one shift to ship between 27,000 and 30,000 cases a day.
Order throughput patterns have literally undergone a transformation. Gone are the days when orders were backlogged at certain stages of the shipping process. Today, employees literally wait for the product to come to them. Back orders, once a common occurrence, have been nearly eliminated, as have most of the costly chargebacks from retailers.
Eliminating throughput bottlenecks has helped to streamline the receiving process as well. A year ago, Conair had 250 40-foot trailers waiting to be unloaded and shipped by Nov. 15 for the holiday season. "We don't have one truck sitting at the pier today," says Mayorek.
Despite the huge gains in productivity, Conair did not lay off any employees. "That's not our style," says Mayorek. Instead, many employees were reassigned. The company has also found that it no longer has to hire an army of temp workers to pick products during peak season, he adds.
Overall,Mayorek says that the system has proved to be good for employee morale and good for business.
"In today's world, you need to give employees the right tools to prepare orders the way the customer wants it," he says, "and this new system has done nothing but improve every day. Conair always puts the customer first, and the [grades] we get from customers have improved tremendously. We're an Aplus supplier.When a customer likes doing business with us, I think it's natural that they increase their orders with us. Our sales department is second to none, but I believe having this equipment in place to ship product adds [revenue] for the sales department. That might be the best part of the story."
When Wal-Mart's RFID mandate first came down, Conair had some tough choices to make. In order to put RFID tags on the cases and pallets it shipped to the mega-retailer, it would have to RFID-enable at least one of its two DCs. The question was, should it try to handle all Wal-Mart merchandise from just one of the sites? Or would it be better off outfitting both DCs with RFID technology?
As Conair saw it, both plans had their drawbacks. If it assigned all Wal-Mart-bound product to a single DC, the site would be overwhelmed by the volume. But outfitting both centers—the one in New Jersey and the one in Arizona—would be a costly proposition.
In the end, Conair did neither. Instead, it built a new DC that would handle only goods destined for Wal-Mart and other retailers that requested RFID-tagged shipments. The DC, which occupies 380,000 square feet, is located in Southaven, Miss.
Once construction was completed, Conair consolidated all of the unique Wal-Mart stock-keeping units (SKUs) that had been stored in locations throughout the company's distribution network in the new RFID-enabled DC. Aside from avoiding the expense of deploying RFID equipment in multiple locations, the strategy also reduced the safety stock associated with multiple DCs and relieved the two main DCs of significant volume.
"That was a good move on our part," says John Mayorek, a senior vice president at Conair. "Our shipping costs have gone down by millions of dollars because we're shipping from one location and the orders are going out complete."