When your claim to fame is your “buy it today, get it tomorrow” delivery promise, you’d better be prepared to make good on that pledge. But that can be a tall order—particularly if you’re a retailer that transports big and bulky items across a sprawling geographic territory.
That was case with Conn’s HomePlus, a furniture, mattress, electronics, and appliance store chain based in The Woodlands, Texas. Launched 130 years ago as a small plumbing and heating company, the retailer today operates almost 150 retail locations across 15 Southern and Western states.
In 2019, as business grew, Conn’s started looking into vendor managed inventory (VMI) solutions as a way to “help [the retailer’s] merchant teams get ahead of the buys,” Michael H. Luckett II, the company’s executive director of logistics and IT management, said in a release. “We were looking to arrive at something that would allow us to see inventory more clearly and move inventory without a lot of manual intervention.”
SMOOTHING THE FLOW
Conn’s has long relied on a hub-and-spoke distribution model, moving replenishment products through a distribution network that includes two regional distribution centers (RDCs) and 11 hub-spoke distribution centers (DCs) and on to 146 retail stores. For the past 40 years, the team managed store replenishment allocation on a “vintage” IBM AS/400 business system that was short on modern analytics capabilities. Conn’s replenishment forecasting required considerable manual effort, with help from spreadsheets and a traditional “min/max” replenishment method, according to the company.
“As a product got down to the ‘min,’ it would buy back to the ‘max,’” Patrick Wehby, an industrial engineer with Conn’s, explained in the release. “It’s very much a feast-or-famine mindset that isn’t great for truck utilization, and also you’re touching the product more often [than strictly necessary] because you’re picking fewer items at any one time.”
As it happened, Conn’s was implementing an EDI (electronic data interchange) solution from software developer TrueCommerce at the time. As that conversation evolved, other TrueCommerce solutions came into the picture—including the developer’s vendor managed inventory software, or VMI.
As the talks progressed, however, it became clear that VMI wasn’t exactly a perfect fit. Although the software offered the features Conn’s was looking for—namely, store replenishment allocation and truck load planning—what the retailer actually wanted wasn’t “really” VMI at all, as its vendors are not involved. “In our implementation, the inventory is going out to our own facilities, not coming in from vendors,” Luckett explained.
In the end, the TrueCommerce VMI proved close enough. After extensive consultation with its client, the company was able to develop a customized version that checked all the boxes.
A CONTROLLED ROLLOUT
The first step in the implementation was a controlled rollout to the retail chain’s RDCs and 11 hub-spoke DCs, where the new user-friendly solution was readily embraced by managers whose jobs quickly became much easier. After a couple of months to work out the bugs, Conn’s expanded the new replenishment solution to its retail stores.
The new system automates the manual process the teams use to build truckloads and release orders. This removes all the guesswork from the DCs’ part, leading to more efficient truck utilization and lower truck counts. And by automating the load-planning process, the VMI solution also ensures that all of the items fit in the truck. This greatly reduces labor and management oversight requirements at the central warehouse and DCs, while also making picking and truck utilization much more efficient.
Within weeks of implementing TrueCommerce’s solution, Conn’s started seeing a return on its investment, according to leaders from the two companies. Wehby estimates that about 75% to 80% of the benefit from TrueCommerce VMI for warehouse operations has come from automating the load-building process alone.
Further, the new VMI has helped the company step up its replenishment game. Now that it has better replenishment forecasts and data, the company has seen a significant drop in product returns, a reduction in transfer movement and product damage (a result of the drop in returns), and fewer out-of-stocks and lower not-in-stock numbers, which helps boost product availability and sales.
With a successful implementation under their belts, both Conn’s HomePlus and TrueCommerce say they’re looking to expand the scope of their partnership. “We’re growing as a business, and we’re expecting TrueCommerce to grow right along with us,” Luckett said in the release.
