July 2003 | Case Studies | I.T. Toolkit

Flex Time: Finding Adaptable Software

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Adjust-it-yourself supply chain software helps a fast-growing retail chain bend the rules.

In the closeout business, the usual rules don't apply. Ship an order with faulty documentation to a typical retail distribution center, and the customer might send it right back. But for the right price, 99 Cents Only Stores will be happy to accept those goods instead.

"The deal we get is because there's a misprint on the labels, for example," says Robert Adams, vice president of information systems at the one-price retail chain, based in Commerce, Calif. In its search for bargains, 99 Cents Only Stores maintains extremely flexible policies toward its vendors. So when the company shopped for technology to aid its expansion into Texas, it looked for software that was equally adaptable.

Major players in the warehouse management systems (WMS) field "were a little too rigid for us," Adams says. When a shipment from a vendor isn't just what the company ordered, 99 Cents Only Stores doesn't want its software to apply strict, punitive rules.

"We have to accept it, get it to our stores, and turn it fast," Adams says.

Founded in 1982, 99 Cents Only Stores operates approximately 150 retail outlets in California, Nevada, and Arizona. The average store does $4.5 to $5 million per year in business; at 99 cents per item that represents a lot of traffic. The warehouse in Commerce ships as many as 250,000 cases per day, Adams says. The stores stock name brand and private label foods and beverages and a host of other consumer goods, including regularly available items and closeout merchandise.

Time for a New System?

Wanting to establish a beachhead in Texas, 99 Cents Only Stores grabbed an opportunity this year to purchase an automated warehouse from the Albertson's grocery chain. The deal closed in January, then "the timeline was accelerated tremendously," Adams says.

With plans to open 15 to 20 stores in the Houston market by the end of this year, the company had to decide right away whether to run the new DC on the WMS it used in Commerce or purchase a new solution.

Custom-designed for 99 Cents Only Stores, the system in Commerce took a suitably flexible approach toward suppliers. But deploying that proprietary system for the Houston facility would not be easy. The new DC houses much more automated equipment than the one in Commerce.

Integrating the old software with the new technology would have required a lot of time and effort, Adams says, and trying to run both facilities from one computer system in Commerce might have disturbed operations in the first DC. Implementing a brand new system in Houston was actually a more conservative choice, he says.

A short search of WMS vendors led the company to HighJump Software, Eden Prairie, Minn. Investigating HighJump's Supply Chain Advantage software, Adams concluded it was a good match for his company's business model.

Getting the system into production quickly was important. Company officials decided they wanted employees in the new DC to start receiving goods by April 15 and begin picking them for the first of the Houston stores by June 1.

Supply Chain Advantage is a suite of supply chain execution modules for warehouse, transportation and yard management; supply chain visibility; event management; data collection; and collaborative inventory management. 99 Cents Only Stores has licensed all the modules needed to run a DC, including the WMS, transportation management, and yard management applications.

Like a Spreadsheet

Supply Chain Advantage can meet the unique demands of a company such as 99 Cents Only Stores because it's designed to be highly configurable, says Christopher Heim, HighJump's president and CEO. Rather than developing a set of functions, the company developed a set of tools that users employ to design functions that fit their business needs.

"It's almost akin to an Excel spreadsheet," he says.

HighJump's founders took this approach because they perceived an unmet need in the market. Customers said there were many attractive supply chain execution products available, but these solutions were expensive and hard to modify, Heim says.

"Companies often put in a system, then put in many manual processes around that system" to handle changes they made in their processes after they bought the software, he says. "So we created a system from the ground up to support easy changes. And we pushed the ability to make those changes back to the customers, because they're the ones that have to react to changes on a daily basis."

It doesn't take an information technology specialist to make those changes, Heim says. He cites one company where a former shipping clerk made 50 modifications to the system in one year.

Adams says it's important to his company that users can make changes to the applications on their own. "We're growing exponentially, and want to get rid of recurring costs. We don't want to be dependent on an outside source to make changes for us."

Along with allowing users to refine their applications, HighJump lets them apply different rules to different situations. "When I receive a certain item, for example, I can have it go through an inspection process," Heim explains. "Or, when I receive from a particular vendor, I can send an e-mail to a certain person."

Once 99 Cents Only Stores signed a contract with HighJump, the implementation moved fast. "The next day we were on a plane to Minnesota to start working on the plan," Adams says. HighJump's developers helped personnel from the retail chain define what they needed the system to do. Along with developing the core functions, they needed to integrate the software with a radio frequency identification (RFID) system and a voice-based picking system.

Along with new stores in the Houston area, 99 Cents Only Stores' new DC could eventually support outlets in San Antonio and Dallas and perhaps parts of Louisiana, Adams says. Plans also call for replacing the proprietary software in the California DC with Supply Chain Advantage.

"Now that we've segmented those environments, we're growing in a way that allows us to bring back better technology to our Commerce location," Adams says. "Meanwhile, we're not affecting that DC while the implementation in Houston is happening."

A Traditional Approach

Bringing Supply Chain Advantage to Commerce will be a more complicated project than getting it up and running in Houston. In the new facility, there's no need to retrain employees, and the operation is starting with just a handful of stores.

In the high-volume Commerce DC, "we're going to try a more traditional approach, where we will bring our receiving process up first, and train workers on that," then apply the new software to the rest of the DC's functions, Adams says.

The company will probably convert the California DC this fall, he says. Warehouse employees from Commerce will train on the system in Houston, so they can gain some basic experience in a less hectic environment.

While 99 Cents Only Stores has already bought all the Supply Chain Advantage modules it can use for the present, Adams says he has his eye on some new ones HighJump has under development, including an application to automate the slotting process.

As fast as it's growing, the company will probably need to call upon HighJump's technology in other locations before long. "We will have this DC filled in a few years," Adams says of the Houston facility. "Texas will be done with 150 stores in two or three years. That means more DCs, and our 25-percent growth path means even more DCs after that."

Based on its experience in Houston, 99 Cents Only Stores and HighJump should be able to get software in place for any new DCs as quickly as they need to. "This warehouse will be ready to service our stores in an extremely aggressive time frame," Adams says.

"To me, it was the right tool," Adams says of HighJump's solution.

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