October 2007 | Case Studies | I.T. Toolkit

Creating Calm from Chaos

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By automating and reorganizing its warehouse, Red-L Distributors cuts costs and creates a cleaner, safer, less frantic work environment.

When you're shopping for logistics software, should you choose a package that you can mold to the way you do business? Or should you revamp your business to take advantage of a great technology solution?

As with most weighty questions, the answer depends on whom you ask. Many logistics software vendors tout the fact that they can configure their software to accommodate the way you run your operation today; you don't have to change a thing.

Yet, some businesses are ripe for change, and the people who run them are glad to move mountains - or racks and bins - if that helps them operate more efficiently.

That's what happened when Red-L Distributors implemented the Latitude warehouse management system from PathGuide Technologies, Mukilteo, Wash., at its distribution center in Edmonton, Alberta, Canada.

"We had to reorganize to make the warehouse match the software, so it would work more efficiently," says Jason Delainey, the company's operations manager. "It took a while to organize."

But the effort paid off. "Inventory is easier to find, and the warehouse is more efficient," he says.

With the new capabilities Latitude provides, Red-L is accomplishing more in the warehouse with less effort. The system also has helped create a cleaner, safer, less stressful environment, making it easier to recruit, train, and hold on to good employees.

Getting Hosed

Red-L distributes hoses and hose fittings to customers in Alberta, British Columbia, and Saskatchewan. It also fabricates hose assemblies and sells a host of related products, such as hand and power tools, lubricants, lubrication equipment, janitorial and sanitation supplies, and skin care products.

Its customers include resellers, equipment rental companies, and end users in manufacturing, forestry, oil field services, oil drilling, and agriculture.

Besides its main facility in Edmonton, Red-L operates from seven other locations - each with a showroom and warehouse - and from a mobile trailer that delivers products to customers' work sites.

Red-L officials implemented Latitude to complement Activant Prophet 21 (P21), an enterprise resource planning system for wholesale distributors that the company bought three years ago.

It installed P21 to replace a 20-year-old enterprise system that no longer provided all the necessary functions, says Guy Ludwig, Red-L's president of operations.

Adding a WMS would help increase warehouse efficiency. "We knew we could do a lot better with the number of workers we have, and gain more effective inventory management," Ludwig says.

Officials at Red-L chose PathGuide to implement the WMS because of its experience integrating its system with P21. "There are other WMS vendors as well, but PathGuide seemed to be the best fit," Ludwig notes.

PathGuide specializes in providing and tailoring systems for industrial distributors. "We understand the business, it's all we do. We don't sell into manufacturing," says Eric Allais, the software company's chief executive officer.

PathGuide's executives also have long experience working with automated data capture systems, such as the radio frequency terminals its customers use with Latitude. Allais spent 18 years working in marketing at Intermec Technologies. His father David served as CEO and later chairman at Intermec before founding PathGuide.

PathGuide markets Latitude particularly to distributors with annual revenues in the $30-million to $300- million range, Allais says. The system manages all core WMS functions, such as receiving, putaway, cycle counting, picking, and shipping.

When companies install the system, they usually deploy 60 to 70 percent of the functions just as they come out of the box. For the rest, developers at PathGuide create custom functions, which the company then incorporates into future releases.

"Once we develop a function for one customer, we make it available to everyone," Allais says.

Latitude operates with a range of handheld terminals supplied by Intermec and Motorola/Symbol Technologies. PathGuide also can accommodate other brands as needed. "As long as the existing hardware is contemporary and programmable, we do what we can to preserve it," Allais says.

An important part of implementation is a three-day training session PathGuide offers at its Mukilteo facility. "We set up a warehouse environment that simulates the customer's own facility," says Allais. PathGuide developers integrate the WMS with the customer's chosen ERP, so personnel can practice using the system as they would at their own site.

Phasing It In

Generally, PathGuide installs the software at the customer's site in two phases. The first phase covers base- level software and receiving functions.

"That allows customers to label their product and bin locations and begin receiving product," Allais says.

In about 30 days, PathGuide returns to install phase two, typically a go-live scenario where the customer performs full putaway, picking, and shipping.

Red-L and PathGuide spent nearly four months getting the system up and running; it went live on April 1, 2007. Reorganizing the warehouse was a crucial early step. The facility actually comprises three buildings, and in the old days, pickers often had to make multiple trips among all three to fill an order.

"Forklifts were racing across the back yard at the best speed they could do," says Rick Lafrance, Red-L's vice president of information technology.

Latitude organizes its facility into zones. Guided by the display on an Intermec handheld terminal, a worker stationed in one building can pick goods for numerous orders in a single trip.

"Recently, a worker picked 15 orders at one time," Ludwig notes. "In the past, picking 15 orders would have required 15 round-trips."

Because the software manages supplier errors more accurately than the old, paper-based process could do, Latitude's receiving functions have helped Red-L improve its quality assurance program. Now, if receivers find a shipment error, they send an instant message to the appropriate person in the purchasing department instead of filling out a mountain of paperwork.

"The purchaser can deal with an error before the order is even received, without the inefficiency of our receiver tracking down someone who can handle it," Delainey says.

Other functions that Latitude has automated for Red-L include serial number tracking and lot tracking for products that require it. By tracking serial numbers on drilling hoses, Red-L provides valuable information to customers - for example, giving an inspector information on how a unit fared during factory testing.

Lot tracking helps Red-L keep tabs on individual lengths of hose. If an order arrives for 15 feet of hose, and the system shows there's a 15-footer in stock, staff can pull that piece, rather than cutting a 20-foot piece and wasting the remainder.

"We used to throw away about $100,000 a year in industrial hose," Lafrance says. "This year, I doubt we'll throw out even $15,000."

With the increased efficiencies that Latitude brings to Red-L, the software should pay for itself within one year, Ludwig predicts.

Soft Benefits

Along with hard benefits such as greater productivity and inventory control, Latitude provides the softer, but no less important, benefit of improved working conditions.

"Most days, the older system caused chaos," Delainey recalls.

"Employees were working themselves to the bone, because they were running around inefficiently. The environment was stressful and tempers were blowing because workers had a lot to do and little time to do it."

Today, employees work at a steady pace, and the greater sense of order has promoted a cleaner, safer environment.

"Workers don't feel pressured to cut corners," Delainey says. "They actually have time to drive a forklift properly, or pull a product out safely."

Because Latitude promotes a pleasant work environment, and provides specific directions that make jobs easier to do, Red-L has also gained an edge in hiring and keeping good employees.

Given Alberta's booming oil industry, that's no easy task. "You can't drive down one street in Edmonton without seeing a Help Wanted sign," Lafrance says.

With a tool such as Latitude, employees don't need extensive knowledge to do good work in the Red-L warehouse, he adds. And, because the software helps keep stress levels low, employees are more likely to stick with the company.

For the future, Red-L expects to extend Latitude to the warehouses in its branch locations. But first, officials plan to explore Latitude functions they haven't tapped yet, such as shipping, replenishment, and cycle counting.

"We've only scratched the surface," Ludwig says.

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