May 2012 | Case Studies | I.T. Toolkit

A New Recipe for Effective Warehouse Management

Tags: Logistics I.T., Warehousing

Hungry to improve order fulfillment, Tastefully Simple orders a highly customizable WMS and savors a 20-percent improvement in pick rates.

Tastefully Simple makes it easy for home cooks to whip up a batch of coconut macaroon bars or a dish of crowd-pleasing spinach dip. But after several years of rapid growth, fulfilling customer orders began to leave a bad taste in the company's mouth, due to an outdated warehouse management system (WMS).

Alexandria, Minn.-based Tastefully Simple sells its packaged sauces, mixes, and gourmet food products at in-home parties where guests sample the items and receive serving suggestions, recipes, and entertaining tips. Since 1995, the company has grown from a modest start-up to a $100-million-plus enterprise with more than 23,000 consultants nationwide.

"We are a direct-sales company, the Avon of food," says Scott Fearing, senior advisor, warehouse systems at Tastefully Simple. To keep up with the company's strong growth, Fearing and his colleagues had to whip up a new recipe for effective warehouse management.

Adapting to Dynamic Needs

As Tastefully Simple expanded its product offerings over the years, it became increasingly constrained by its legacy WMS. Because the system needed extensive custom programming, the company had to work within its original framework, which hindered agility.

"The system's limitations were problematic," says Fearing. "Our dynamic business model changed several times over the years, which had a huge impact on our order profile.

"We needed a flexible system that allowed for easy configuration changes," he adds. "Configurations in our old WMS took months of expensive custom programming. We wanted to make changes faster and more cost effectively."

The company also sought a solution that would scale with its growing business. "We didn't want to hit a ceiling imposed by the functionality of our old system," says Fearing.

Tastefully Simple reviewed what it considered to be the top 10 WMS providers. After narrowing the list to four finalists, it held preliminary meetings to articulate its criteria for a new warehouse management system. The company sent the finalists a comprehensive request for proposal that defined its high-level business requirements. Three of the four finalists continued; the fourth dropped out due to shortcomings in its lot-tracking capability.

"Each vendor presented an on-site demonstration," says Fearing. A team of 10 employees from across the company were involved in the evaluation. Ultimately, they chose to work with Reston, Va.-based Softeon Inc.

"The team found the Softeon system's navigation best met our needs," says Fearing. "It was very logical, and the user interfaces made perfect business sense.

"Further, the system allowed simple configurations that let us change and enhance our processes with minimal testing and no impact to our business model," he adds.

From a technology perspective, a supply chain execution product suite is at the heart of Softeon's platform. Softeon WMS is the core module, consisting of plug-in elements such as order and transportation management, assembly, and kitting. The solution is fully service-oriented architecture based—its high-level software components include Web services that are event- or process-driven, with non-proprietary, component-based architecture.

"Tastefully Simple needed the ability to extend functionality easily to integrate with its back-end systems, as well as with the materials handling equipment on the floor," says Dinesh Dongre, vice president, Softeon. "Easy and effective integration was essential, as were demanding performance criteria and the ability to meet high-availability requirements."

Another requirement was leveraging Tastefully Simple's existing infrastructure. Because the company uses SQL Server across the enterprise, it was adopted for the back-end layer. Softeon developed a logic application layer in between the WMS and back-end for business logic, and the platform's powerful rules engine enabled quick reconfiguration to optimize processes or adopt new requirements.

The Implementation Process

Tastefully Simple signed its agreement with Softeon the first week of March 2011; the implementation went live Sept. 15, 2011.

"We had developed business rules and requirements, which we forwarded to Softeon," says Fearing. "Within one month, we were on-site to see the basic start of our system. Softeon had the system configured, and we had done a good deal of data migration. That was our first review."

Then components were migrated to the Tastefully Simple site and environment, and Softeon continued to configure the application to meet the requirements.

"Fortunately, we had an extensive test environment, with numerous people trying out the software," notes Fearing. "By June, we were looking at specifics and had a dedicated testing team on our site. Some of our database personnel were also involved in building the interfaces and doing configurations. In August, after intensive testing, we were 90 percent or more complete. On Sept. 15, we launched the system. It took one day to do the final data migration, and we were shipping orders the next day."

Another impressive note: the system has not gone down once since its launch in September 2011. "It has performed every day since we went live," says Fearing.

"Obviously, we spent time testing and perfecting processes during the first weeks after implementation," he adds. "But now, the system alerts us to events, such as order upload errors and download issues, we never saw with the old system. It also provides better visibility into back-end systems."

Tastefully Simple made more configuration changes in the first two months using the new system than it did during the previous six years of running its former WMS, according to Fearing.

"We gave the system's design our best shot," he says. "Most of our requirements stemmed from how we previously ran the business. As we learned about the system's features, we made simple configuration changes to speed processes and resolve problems more efficiently."

Profile in Productivity

Tastefully Simple has many different order profiles. With the old system, the company had to force those profiles through the same process to one pick area that did everything. With the new system, it can filter orders by SKU, size, queue, weight, and other characteristics, and it has developed additional pick areas to handle very specific order types.

"This approach has driven efficiency way up," says Fearing. Efficiency and productivity gains are both significant, as Tastefully Simple can now tailor its environment to each order.

One of Tastefully Simple's major challenges had been fourth-quarter sales. Holiday sales require lots of gift building—and special kitting.

"Softeon helped us create a special odd-sized pick area. For the first time, we are able to separate items from an order for fulfillment, then have the system marry up the data at the end of the process," says Fearing. "This was an issue we wrestled with for years; with Softeon, the solution was part of our basic system."

Dishing Up Benefits

With the new system, Tastefully Simple can handle a higher percentage of work with a given headcount. "We have always contracted out work during busy periods; now we're able to do more work with our team members," Fearing notes.

Tastefully Simple measures productivity by picks-per-hour, and that metric has continued to rise steadily since the new system went live. "Picking throughput is improving, as is some soft activity that we typically don't measure," says Fearing. "With the flexibility that we have setting up our production lines, we've seen a 30-percent increase in our picks-per-hour metric.

"We are also exploring the new flexibility options to our main line conveyor pick area, and we see the potential for a 15- to 20-percent improvement to our picks per hour rate as well," he continues. "The receiving process is more visible. We've been able to develop more advanced putaway rules. Our organization is cleaner and more logical."

The keys to success for any implementation include understanding what you are looking for, your pain points, and what your business actually does. "A major reason implementations fail is not including change management as part of the core implementation process," says Fearing. "Tastefully Simple's team collaboration throughout the process was critical to ensuring the system was adopted much earlier than day one of going live."

Duties were clearly segregated during implementation. The Softeon team focused on meeting configuration stability and boundary conditions; the Tastefully Simple team focused on testing core business processes. This helped ensure that Softeon addressed the factors that made a difference to the company's daily operations. The iterative nature of system development, part of the vendors' methodology, also supported this process.

Implementation occurred in three phases. The early phase of testing by Tastefully Simple focused on the receiving side of the system: receiving purchase orders from its backend system, entering them into the WMS, and reconciling inventories.

The next focus was on ordering. How would the system receive order profiles? What different order profiles needed to be considered? Softeon started with high-volume order profiles, then worked through to the more complex, irregular ones.

Finally, the team moved to performance. Because of the automation requirements of picking, packing, and fulfilling orders, they paid particular attention to this element.

"We focused on what was needed to achieve high performance, whether it was RF equipment or tying into conveyor processes," says Dongre. "All the stress and performance testing was in the final stage. We leverage a standard methodology that identifies risks and ensures user adoption as early in the development cycle as possible.

"Tastefully Simple had solid processes and excellent organization, as well as a strong project management group," he continues. "This collaboration—the clarity of who was responsible for what, and everyone taking ownership—was a big part of being able to ship the day after going live."

A Little Closing Magic

Fearing emphasizes the importance of the working relationship between vendor and customer. "Some companies that need a WMS solution may hire a provider and say, 'Go into our warehouse and set it up.' Then they are stuck with what they get," he says.

"The Softeon/Tastefully Simple partnership was built on two competent teams sharing a goal and planning relentlessly to hit it," he adds. "That was the magic solution for us."