Executive Briefings

OH Logistics Scores a Bulls Eye for Remington Arms' Distribution

Remington Arms Company, headquartered in Madison, N.C., designs, produces and sells sporting goods products for the hunting and shooting sports markets, as well as for the military, government and law enforcement. It distributes its products throughout the U.S. and in over 55 countries. Founded in 1816 in upstate New York, the company is one of the nation's oldest continuously operating manufacturers.

Remington is the only U.S. manufacturer of both firearms and ammunition products and one of the largest domestic producers of shotguns and rifles. Revenues in 2004 were $393m. Before 2000, Remington Arms distributed its sporting goods products to wholesalers, dealers and retailers through three different third-party logistics (3PLs) providers.

"We essentially selected the best 3PL close to our manufacturing facility and let them manage the day-to-day distribution," says Ron Bristol, chief operating officer for Remington in Madison, N.C. While this strategy was simple to operate, it meant that Remington Arms had three different warehouses distributing to major retailers like Wal-Mart and Kmart and specialty retailers like Academy Sports, Bass Pro Shops, Cabela's, Dicks Sporting Goods, and Gander Mountain.

"Customers were getting multiple shipments from these different warehouses each week," says Bristol. Not only was this overlap inefficient, customers-especially the large retailers-did not want multiple deliveries.

To solve this problem, Remington decided to consolidate its distribution into one central facility. It interviewed 10 3PLs in the Memphis area during the second half of 1999 that met search criteria. Remington wanted a 3PL with strong management capabilities, including human resources, distribution and a wide array of service offerings from transportation to construction to material handling. In January 2000, Remington Arms selected Ozburn-Hessey Logistics (OH Logistics) from a shortlist of three providers based on their proposal to combine the three distribution facilities into one global distribution center in Memphis, Tenn.

OH Logistics' internal partner, ProVenture Commercial Real Estate, found an appropriate site and negotiated significant economic incentives for Remington Arms. ProVenture worked with a local construction firm to design and build the facility, as well as to negotiate a sale/leaseback arrangement for the facility on behalf of Remington. OH Logistics engineered the facility layout design and sourced all material handling equipment. It also engineered all the operational processes and made the necessary system enhancements to support them. The transition included extensive system cross-training, move planning and sequencing.

Building construction was completed in October 2000. Remington and OH Logistics moved in November 1, and immediately started shipping. The transition was completed in the third week in December.

"The learning curve took about six months," explains Bristol. "Procedural errors were the toughest part of the transition with more than 40 new employees." From inception of the plan through complete design and construction of facility, the transition took 15 months. "From an overall perspective, it went very well."

In addition to the economic incentives and shared facility sale revenues, Remington reduced space requirements by 50,000 square feet and overall costs by $500m in the first year. These savings resulted in a 5 percent decrease in the distribution cost per unit. Cost reductions and operational improvements have continued. In 2004, OH Logistics added voice pick technology, which has increased picking and shipping accuracy rates to 99.9 percent and has resulted in a 30 percent faster pick process.

"I consider OH Logistics an extension of the Remington distribution department," says Bristol. "Their commitment and dedication to meeting business deadlines and customer requirements is reflected on a consistent basis. There is a great deal of pride in meeting and exceeding challenges presented."

Remington Arms Company, headquartered in Madison, N.C., designs, produces and sells sporting goods products for the hunting and shooting sports markets, as well as for the military, government and law enforcement. It distributes its products throughout the U.S. and in over 55 countries. Founded in 1816 in upstate New York, the company is one of the nation's oldest continuously operating manufacturers.

Remington is the only U.S. manufacturer of both firearms and ammunition products and one of the largest domestic producers of shotguns and rifles. Revenues in 2004 were $393m. Before 2000, Remington Arms distributed its sporting goods products to wholesalers, dealers and retailers through three different third-party logistics (3PLs) providers.

"We essentially selected the best 3PL close to our manufacturing facility and let them manage the day-to-day distribution," says Ron Bristol, chief operating officer for Remington in Madison, N.C. While this strategy was simple to operate, it meant that Remington Arms had three different warehouses distributing to major retailers like Wal-Mart and Kmart and specialty retailers like Academy Sports, Bass Pro Shops, Cabela's, Dicks Sporting Goods, and Gander Mountain.

"Customers were getting multiple shipments from these different warehouses each week," says Bristol. Not only was this overlap inefficient, customers-especially the large retailers-did not want multiple deliveries.

To solve this problem, Remington decided to consolidate its distribution into one central facility. It interviewed 10 3PLs in the Memphis area during the second half of 1999 that met search criteria. Remington wanted a 3PL with strong management capabilities, including human resources, distribution and a wide array of service offerings from transportation to construction to material handling. In January 2000, Remington Arms selected Ozburn-Hessey Logistics (OH Logistics) from a shortlist of three providers based on their proposal to combine the three distribution facilities into one global distribution center in Memphis, Tenn.

OH Logistics' internal partner, ProVenture Commercial Real Estate, found an appropriate site and negotiated significant economic incentives for Remington Arms. ProVenture worked with a local construction firm to design and build the facility, as well as to negotiate a sale/leaseback arrangement for the facility on behalf of Remington. OH Logistics engineered the facility layout design and sourced all material handling equipment. It also engineered all the operational processes and made the necessary system enhancements to support them. The transition included extensive system cross-training, move planning and sequencing.

Building construction was completed in October 2000. Remington and OH Logistics moved in November 1, and immediately started shipping. The transition was completed in the third week in December.

"The learning curve took about six months," explains Bristol. "Procedural errors were the toughest part of the transition with more than 40 new employees." From inception of the plan through complete design and construction of facility, the transition took 15 months. "From an overall perspective, it went very well."

In addition to the economic incentives and shared facility sale revenues, Remington reduced space requirements by 50,000 square feet and overall costs by $500m in the first year. These savings resulted in a 5 percent decrease in the distribution cost per unit. Cost reductions and operational improvements have continued. In 2004, OH Logistics added voice pick technology, which has increased picking and shipping accuracy rates to 99.9 percent and has resulted in a 30 percent faster pick process.

"I consider OH Logistics an extension of the Remington distribution department," says Bristol. "Their commitment and dedication to meeting business deadlines and customer requirements is reflected on a consistent basis. There is a great deal of pride in meeting and exceeding challenges presented."