Executive Briefings

At Warehouses Run by ATC Logistics, Things Can Get Complicated

The specialist in third-party logistics services for high-tech customers needed a warehouse-management system that could do much more than just store product on the racks.

The standard warehouse management system (WMS) is intended to boost the efficiency of basic functions such as receiving, putaway and picking. It can end up saving the user large amounts of time and money - but it seldom directly addresses the critical element of customer service.

ATC Logistics & Electronics needs more. A major provider of third-party logistics (3PL) services to makers of high-tech electronics products, the company stakes its reputation on the ability to meet nearly 100 percent of service-level commitments. That's no easy task, given the scale of ATC's operations: more than 61 million items processed annually, including 11 million returns and exchanges, and the packaging and kitting of 8 million pieces.

The physical size of the operation only adds to the complexity. ATC runs six distribution and fulfillment centers, three around Fort Worth, Tex., and three others in Matamoros, Mexico; Mississauga, Ont.; and Memphis, Tenn. Together they amount to more than a million square feet of warehouse space, according to ATC president Antony Francis.

Prior to 2001, ATC had been relying on legacy technology, in the form of a material requirements planning (MRP) application, to run its facilities. It was time for something more sophisticated. "We were looking for a top-tier WMS that specifically would do high-velocity serialized inventory," says Marc Sherman, vice president of information technology. Other requirements were the ability to integrate with an Oracle Corp. backbone, run on mid-tier UNIX hardware, and be highly configurable.

That last element was especially critical. In serving its customers, ATC has to be almost infinitely adjustable. New product comes in every day and must be turned quickly. The success of ATC's clients depends on their ability to satisfy customer demands for rapid replacement of faulty product. Equally important is the manufacturer's ability to refurbish items and return them to the market as quickly as possible. The exceedingly brief lifecycles of most consumer-electronics items leave little room for delay.

"The old system was good at taking and fulfilling orders and moving data rapidly, but it wasn't a WMS that could track an order from the moment it came in," says Sherman. Nor could it handle complex cartonization or advanced techniques for cube optimization and cross-docking. Bottom line: "It didn't lend itself to changing business needs."

ATC went for a WMS developed by RedPrairie Corp., a vendor of applications for a variety of transportation and fulfillment functions, whose roots are in warehousing. Tom Kozenski, vice president of product strategy with RedPrairie, says the vendor knew that ATC was looking for something more than a barebones WMS. It needed a system that could support a high-volume operation that handled finished goods as well as service parts, returns and repairs.

"They wanted to do it all," Kozenski says. "They didn't have to buy two or three applications to get it all done."

The new WMS was phased in at the various ATC locations over a period of about six months. The technology part of the project offered relatively few challenges, but there was a big adjustment required on the human side. Specifically, employees had to trust what the system was telling them. Previous applications allowed workers to put product virtually anywhere they wanted, says Sherman. Based on parameters programmed into the new system, RedPrairie's application dictates where an item should - and shouldn't - go.

At the outset, Sherman says, ATC found itself tweaking the system to reflect the company's traditional way of doing things. "The application was far ahead of the business process," he says. Gradually, ATC dismantled the modifications as it became used to an automated, event-driven process.

ATC's customers also had to be educated in the benefits of the new system. Having functioned in a world without Web-based visibility, they were accustomed to receiving regular e-mails and spreadsheets detailing the movement and handling of their goods. With implementation of the RedPrairie tool, that flow of information came to a halt. It was replaced with a Web browser that offered managers information at their fingertips, in a faster and more accurate fashion than before. Nevertheless, some customers had to be weaned off the old method.

The education of warehouse staff was another vital element in the WMS implementation. Sherman says RedPrairie helped to train ATC managers to become "super users," who could then train others within the facilities. The degree of individual control afforded by the system can be both a strength and a challenge to operators, he points out. They have the power to reconfigure picking and packing routines based on changes in order type or carrier. ATC's own technical group handles modifications and support for the software, using the proprietary SQL (structured English query) language taught to them by RedPrairie. "They really assumed ownership," Sherman says.

The RedPrairie WMS is now in place at all of ATC's facilities. The application is running behind the user's firewall at its own data center in Oklahoma City, Okla. Sherman says the company prefers a traditional client/server setup over the hosted, or "cloud"-based model that is gaining popularity for many kinds of software applications. ATC's heavy use of product serialization, and reliance on detailed lifecycle data, makes a hosted approach unfeasible. "In this particular business," Sherman says, "we're not there yet."

Nor has the company implemented the new breed of engineered labor standards, which are part of many extended WMS packages today, and can monitor worker performance at every step. With 2,700 employees spread over six facilities, ATC would find it difficult to cope with the data involved in measuring productivity against engineered standards, Sherman says. The system generates enough information as it is: "It's not unusual [for us] to process more than 250,000 transactions per day," he says, "and over 400,000 messages."

Kozenski notes that the RedPrairie WMS contains some additional features, in particular voice technology, that could be applied to the ATC operation. The vendor also offers touchscreen capability for packing station operations.

As for ATC, it has some ambitious ideas for expanding its markets and customer base. Several months ago, says Francis, the company was talking about offering additional transportation services, including two-day ground delivery to 100 percent of the country. (Currently that option doesn't include customers in the four corners of the continental U.S.) It was also considering opening up new warehouses in Reno, Nev., and Harrisburg, Pa. For the moment, however, all plans are on hold, thanks to the recent acquisition of ATC's parent by Genco Supply Chain Solutions. ATC stands to take advantage of many of Genco's existing sites and services, but the precise nature of the integration has yet to be determined.

However its plans develop, ATC intends to continue relying on the RedPrairie software, which could be extended to parts of Genco. "RedPrairie will play a part, absolutely," says Francis. "In integration meetings [with Genco], they have looked at our system and said that they really want to use some of our services."

Resource Links:
ATC, www.atcle.com
RedPrairie, www.redprairie.com

The standard warehouse management system (WMS) is intended to boost the efficiency of basic functions such as receiving, putaway and picking. It can end up saving the user large amounts of time and money - but it seldom directly addresses the critical element of customer service.

ATC Logistics & Electronics needs more. A major provider of third-party logistics (3PL) services to makers of high-tech electronics products, the company stakes its reputation on the ability to meet nearly 100 percent of service-level commitments. That's no easy task, given the scale of ATC's operations: more than 61 million items processed annually, including 11 million returns and exchanges, and the packaging and kitting of 8 million pieces.

The physical size of the operation only adds to the complexity. ATC runs six distribution and fulfillment centers, three around Fort Worth, Tex., and three others in Matamoros, Mexico; Mississauga, Ont.; and Memphis, Tenn. Together they amount to more than a million square feet of warehouse space, according to ATC president Antony Francis.

Prior to 2001, ATC had been relying on legacy technology, in the form of a material requirements planning (MRP) application, to run its facilities. It was time for something more sophisticated. "We were looking for a top-tier WMS that specifically would do high-velocity serialized inventory," says Marc Sherman, vice president of information technology. Other requirements were the ability to integrate with an Oracle Corp. backbone, run on mid-tier UNIX hardware, and be highly configurable.

That last element was especially critical. In serving its customers, ATC has to be almost infinitely adjustable. New product comes in every day and must be turned quickly. The success of ATC's clients depends on their ability to satisfy customer demands for rapid replacement of faulty product. Equally important is the manufacturer's ability to refurbish items and return them to the market as quickly as possible. The exceedingly brief lifecycles of most consumer-electronics items leave little room for delay.

"The old system was good at taking and fulfilling orders and moving data rapidly, but it wasn't a WMS that could track an order from the moment it came in," says Sherman. Nor could it handle complex cartonization or advanced techniques for cube optimization and cross-docking. Bottom line: "It didn't lend itself to changing business needs."

ATC went for a WMS developed by RedPrairie Corp., a vendor of applications for a variety of transportation and fulfillment functions, whose roots are in warehousing. Tom Kozenski, vice president of product strategy with RedPrairie, says the vendor knew that ATC was looking for something more than a barebones WMS. It needed a system that could support a high-volume operation that handled finished goods as well as service parts, returns and repairs.

"They wanted to do it all," Kozenski says. "They didn't have to buy two or three applications to get it all done."

The new WMS was phased in at the various ATC locations over a period of about six months. The technology part of the project offered relatively few challenges, but there was a big adjustment required on the human side. Specifically, employees had to trust what the system was telling them. Previous applications allowed workers to put product virtually anywhere they wanted, says Sherman. Based on parameters programmed into the new system, RedPrairie's application dictates where an item should - and shouldn't - go.

At the outset, Sherman says, ATC found itself tweaking the system to reflect the company's traditional way of doing things. "The application was far ahead of the business process," he says. Gradually, ATC dismantled the modifications as it became used to an automated, event-driven process.

ATC's customers also had to be educated in the benefits of the new system. Having functioned in a world without Web-based visibility, they were accustomed to receiving regular e-mails and spreadsheets detailing the movement and handling of their goods. With implementation of the RedPrairie tool, that flow of information came to a halt. It was replaced with a Web browser that offered managers information at their fingertips, in a faster and more accurate fashion than before. Nevertheless, some customers had to be weaned off the old method.

The education of warehouse staff was another vital element in the WMS implementation. Sherman says RedPrairie helped to train ATC managers to become "super users," who could then train others within the facilities. The degree of individual control afforded by the system can be both a strength and a challenge to operators, he points out. They have the power to reconfigure picking and packing routines based on changes in order type or carrier. ATC's own technical group handles modifications and support for the software, using the proprietary SQL (structured English query) language taught to them by RedPrairie. "They really assumed ownership," Sherman says.

The RedPrairie WMS is now in place at all of ATC's facilities. The application is running behind the user's firewall at its own data center in Oklahoma City, Okla. Sherman says the company prefers a traditional client/server setup over the hosted, or "cloud"-based model that is gaining popularity for many kinds of software applications. ATC's heavy use of product serialization, and reliance on detailed lifecycle data, makes a hosted approach unfeasible. "In this particular business," Sherman says, "we're not there yet."

Nor has the company implemented the new breed of engineered labor standards, which are part of many extended WMS packages today, and can monitor worker performance at every step. With 2,700 employees spread over six facilities, ATC would find it difficult to cope with the data involved in measuring productivity against engineered standards, Sherman says. The system generates enough information as it is: "It's not unusual [for us] to process more than 250,000 transactions per day," he says, "and over 400,000 messages."

Kozenski notes that the RedPrairie WMS contains some additional features, in particular voice technology, that could be applied to the ATC operation. The vendor also offers touchscreen capability for packing station operations.

As for ATC, it has some ambitious ideas for expanding its markets and customer base. Several months ago, says Francis, the company was talking about offering additional transportation services, including two-day ground delivery to 100 percent of the country. (Currently that option doesn't include customers in the four corners of the continental U.S.) It was also considering opening up new warehouses in Reno, Nev., and Harrisburg, Pa. For the moment, however, all plans are on hold, thanks to the recent acquisition of ATC's parent by Genco Supply Chain Solutions. ATC stands to take advantage of many of Genco's existing sites and services, but the precise nature of the integration has yet to be determined.

However its plans develop, ATC intends to continue relying on the RedPrairie software, which could be extended to parts of Genco. "RedPrairie will play a part, absolutely," says Francis. "In integration meetings [with Genco], they have looked at our system and said that they really want to use some of our services."

Resource Links:
ATC, www.atcle.com
RedPrairie, www.redprairie.com