Family Dollar's Blueprint for Expansion
Streamlining transportation operations and implementing inbound logistics practices supports phenomenal growth and makes sense for Family Dollar.
When Jim Burns joined Family Dollar Stores in January 2000 as its new vice president of transportation, the self-service discount retailer was growing at the rate of 500 to 600 stores a year. Today, it operates more than 5,100 stores, and, when it opens a new DC in Mariana, Fla., by the end of 2004, the retailer's distribution network will have doubled from four to eight.
Supporting that growth is a streamlined transportation operation that has come a long way from the manual operation Family Dollar had in place just a few years ago. Back then, "we were pretty much a fax and phone environment," Burns says.
While Family Dollar maintained centralized contracts with certain carriers, inbound transportation was largely decentralized, with each DC working with vendors. This led to less- than-optimal control over how the chain allocated freight and what rates it charged, Burns notes. In addition, the company took months to gather accurate data.
"When I came onboard at Family Dollar, it was with the understanding that we would get a transportation management system that would work for the company," he explains. "So we began shopping for one in mid-2000."
Family Dollar considered a number of TMS solutions. By early 2002, the company entered into serious discussions with one of the big-name TMS vendors, attending its user conference and talking with a number of users about the solution. But Family Dollar's leadership became concerned about the vendor's financial stability, and decided to go elsewhere.
The project team called back in a TMS vendor that it had eliminated when the selection process first began—Shelton, Conn.-based G-Log.
"We didn't believe then that G-Log had the functionality we needed to move forward," Burns recalls.
Second TMS a Charm
The second time around, the project team discovered that G-Log's solution, GC3, had all the functionality that Family Dollar was looking for.
In addition, "G-Log's web-native product offered us the opportunity to get going fairly quickly," Burns says, "because we wouldn't have to bring up carriers and vendors on Electronic Data Interchange (EDI)," as other TMS offerings required.
"We began working through the process, talking with G-Log about whether we would host the solution, or whether they would host it for us," Burns says. In September, the project team began planning for the implementation of the G-Log solution, setting up timelines and briefing vendors, carriers, and buyers on the change.
At about that time, a new CIO, Josh Jewett, joined the Family Dollar team, who quickly brought him up to speed on the contract. "He was integral to the contract negotiation process, and took the lead for us," recalls Burns. In early December 2002, Family Dollar and G-Log signed the final agreement and began taking steps to implement the solution.
Speaking Trucks and Gigahertz
The project team was headed by Helen Crotty, hired specifically for the initiative during the summer of 2002. When selecting a manager for the project, Burns looked for "someone with experience working with a TMS, and someone who could speak trucks and trailers as well as gigahertz and megahertz."
Crotty, who had played a key role during a previous employer's TMS implementation, combined transportation with systems savvy.
Working with her on the core project team was a Family Dollar colleague, Rodney Combs, who served as IT project manager for the implementation; the individual designated as super user, Chris Starks; and the project manager from G-Log. They worked with a number of other people throughout the implementation, and reported to an executive steering committee.
"We initially met every week, then every other week, then, after the final implementation in July-August, we met as needed," Burns says.
At the same time Family Dollar was implementing the new system, Burns moved to centralize transportation management. "We eliminated three positions at each distribution center," he explains, terminating a total of 21 positions at the DCs and adding 11 positions at company headquarters in Matthews, N.C.
Implementing the web-based system subsequently enabled Family Dollar to eliminate the need for 10 positions. Most of the individuals who lost their jobs were transferred to other positions within the company.
Early in 2003, the incumbent inbound logistics manager at the Matthews DC was offered the position of managing the transportation operations center. Transportation coordinators were hired in March and April, and trained by Helen Crotty.
Burns also charged Crotty with change management. "At a former employer, we had a lot of problems with implementing a new system because we did not consider the change management aspects of it," Burns says.
To ensure that wouldn't happen at Family Dollar, he made change management a top priority for Crotty, who developed a training and awareness plan for internal staff across all departments. In addition, 16 to 18 carriers were invited to attend a half-day informational session early in 2003, which was well received.
Family Dollar elected to phase in implementation of the new system. "We didn't want to stretch test GC3, nor did we want to stretch test ourselves," Burns notes. "So, we began in April with about one-third of our staff in the operations center."
The first phase went live with 50 large vendors in early April. Another 50 were added shortly thereafter, then another 75, then another 100, and so on, with some 900 vendors now operating via the G-Log solution.
Savings Goals Already Exceeded
Family Dollar, which just completed implementing its domestic inbound operation, has already exceeded savings goals.
In December 2003, the company began hosting the system in-house as planned, and it is in the process of implementing the import program, Burns says. This phase of the project will enable Family Dollar to track merchandise from overseas vendors through delivery at the DC and release of the container back to the steamship line.
"Knowing where our freight is, down to the SKU level, will do wonders for the buying community," Burns says.
While Burns eventually wants to get as much of Family Dollar transportation systems as possible on one platform, he is not pushed to do so.
"I do want to get EDI going with our carriers beginning this spring. Using GC3, we'll move from an e-mail tender to an EDI tender, which will facilitate the carriers accessing the tender directly in their system."
In addition, Family Dollar will evaluate G-Log's new version when it is released this spring, particularly its automated appointment system.