Executive Briefings

Seasonality, Compliance Issues Drove Columbia Sportswear's WMS Pick

A conversation with Dan Dougherty, director of technical services at Columbia Sportswear, Portland, Ore.

Since its establishment in 1938 near the banks of Oregon's Columbia River, Columbia Sportswear has enjoyed consistent growth. With 2004 sales topping $1bn, the company's outdoor clothing and footwear products have a healthy percentage of the U.S. market and are making rapid headway in Europe. To help manage this expanding and highly seasonal supply chain, Columbia partnered with Manhattan Associates, Atlanta, for a warehouse management solution.

Q: I see that you have been involved with Columbia's expansion in Europe. Tell me a little about that.
Dougherty: Yes, I have been with Columbia for the past eight years and I spent two and a half of those years living in France, helping the project team build the distribution center we currently operate there for the European market. When the decision was made to build the DC, a group of six of us went over to create a core staff. We basically hired all the people and helped manage the siting and construction of the building, the implementation of the warehouse management system and the startup. After it was running, we came home.

Q: And what is your current role?
Dougherty: I am director of technical services, specifically in the distribution area, so my responsibilities are to support the corporate process improvements that we are always trying to make in distribution, both domestically and internationally.

Domestically, we have two distribution centers. The largest is here in Portland, where we have something over 800,000 square feet. We serve all of our national accounts out of this DC. The other U.S. facility is in Robards, Ky. That facility supports certain specific products, principally footwear, and, again, that is on a national basis. We are not regionalized; we are divided by product group.

Corporately, we have another DC in Canada and one in Korea and we have a third-party DC in Japan. All of those distribution centers receive containers directly from our suppliers, which are mainly located in Asia, with a few in Central America. In the U.S. we use various West Coast ports and occasionally for the Kentucky facility we use some East Coast ports. For Europe, we primarily use the Ports of Rotterdam, Antwerp and Dunkerque, but we are starting to use some other ports of entry in Europe as well.

Q: What are your key drivers of demand?
Dougherty: Seasonality and promotions certainly are the two key ones. We are a very seasonal business. A lot of our product and certainly our largest revenue quarter is the third quarter, so we are talking there about fall goods. In terms of just the nuts and bolts of distribution, with fall goods we get about half as many units in a case as we do in spring. That impacts the value that we are shipping, but it also impacts the number of boxes we have to handle in the DC, so operations vary dramatically between the different seasons. In one we may be handling more units, but in the other it's more cases. We have to make sure that our processes and our technology solutions are flexible enough to accommodate that.

Q: Was this the primary issue you wanted to address when you went shopping for a warehouse management system?
Dougherty: Seasonality was definitely one of the issues. Another very important one for us was compliance with the consumer products industry, especially in the U.S. and to a lesser degree internationally. We were looking for a best-of-breed product that would allow us to accommodate those different compliance requirements without having to do so much custom coding on the system.

Compliance issues relate to the way goods are labeled and packaged, but also to the issue of EDI file transfers and customer freight routing.

Q: What led you to select Manhattan Associates as your vendor for this project?
Dougherty: Our original selection of Manhattan as a partner occurred in 1997, which was before I joined Columbia in early '98. From what I understand about that process, quite an extensive survey was conducted over several months to look at various providers and also to evaluate producing a warehouse management system internally. Again, the criteria they were looking for was a flexible product that met the compliance requirements we were getting confronted with from our growing customer base. A very extensive list of providers was reviewed on paper and visits were made to client sites for four or five solutions. In the end, Manhattan was chosen for the product it then called PkMS (now Manhattan Warehouse Management System). We still run that product in Portland as well as in France. We stayed with Manhattan when we started up the DC in Kentucky, but there we upgraded to a new version of the product. So we are running a couple of different versions in our DCs.

Q: How has your partnership changed and evolved over time?
Dougherty: I have been involved with these projects since I joined the company in '98. Columbia has had three "go-lives" on a big scale: Portland, France and Kentucky. We also installed PkMS at two facilities in Holland while we were operating there (before opening the DC in France), so we really have had five go-lives.

As a company, we have grown and become a lot better at making these kinds of system changes. We have a very developed team of technicians both on the IS side and the engineering side. We have a group that is responsible for the training and testing of both the warehouse management product itself as well as the interface to the material handling equipment and controls. So we improved a lot between the original project here in Portland and the implementation at Kentucky.

We also notice that Manhattan has improved and grown as a company in the period of time that we have done business with them. These implementations have seemed to get easier over time.

One area where we created a lot of synergy, for example, is in the six or seven critical interfaces that connect back to our corporate enterprise system, which is JD Edwards. As we began to repeat installations at new sites, we found we could reuse these interfaces without having to reinvent the wheel each time.

Another thing we learned over time is not to hesitate in applying resources to the project. I think early on we might have been a little reluctant to do that. But now we realize just how much work and effort is required to properly prepare for making a change of this magnitude.

Q: Can you give us a picture of how you use the system?
Dougherty: I explained earlier that most of our product comes in from Asia or from South and Central America. So it lands at the port and clears customs, then is transported to one of our DCs. At that point, we begin our interface with our host system. From the JD Edwards system, we download purchase orders and we reconcile inventories against those purchase orders as we receive goods into the building. That is the first important check. From that point forward, we create a unique identifier-a barcode label-for each case that we receive. This allows us to process that case through the building, whether we end up shipping it as a full case to the customer or breaking it down into pieces that are picked individually into multiple orders.

A fairly large percentage of goods are shipped as less than a full case, or what we call re-pack. So at the three corporate DCs in Portland, Europe and Kentucky, we have sorting equipment that we use to facilitate taking those individual units and processing multiple customer orders at the same time. Because we have a newer version of the software in Kentucky, we are able there to do pick waves and pack waves, which enables us to process a larger amount of work in one group. Here in Portland and in Europe, for the time being, we are running on an older version, so we still create waves of pick tickets that go out onto the floor, which don't allow us to get the aggregation that we get with the newer process.

A typical order, with normal processing, leaves the building within two days. Exceptions to that are orders with value-added services, where we do some special ticketing or labeling or putting products on hangers. That may take another couple of days to process through. Rush orders always are shipped within 24 hours, but if we get an order early enough in the day we can get it out the same day.

Q: Have you quantified any of the benefits?
Dougherty: I don't have hard numbers but, overall, we certainly have improved our process with use of the warehouse management product and, as we have grown as a user, we have learned to be a bit more sophisticated. We have some pretty good experts now in the building who are learning how to use some of the pieces that we bought in with the later versions-things like the performance management package, the labor management package, the transport execution package. We mostly have monitored things that impact customer service, like order fulfillment and order accuracy and those have improved. We are looking at 99.9-plus percent of accuracy in fulfillment and that is a level that we have been able to maintain, so we are very happy with that. That is partially due to the warehouse management system but it also depends on having good interfaces back to the host.

Q: Are there any lessons learned from this project that you would like to share with our readers?
Dougherty: We have learned that when it comes to new systems and new processes and new software, we need to test more than we might think we should. We believe a lot of testing is what has made these implementations so successful. We test the material handling equipment and the WMS separately. Then, when we are satisfied that both of those are going well, we do an integrated test where we have them work together. We run a lot of product around the building before we even start production just to ensure that we feel confident it is going to work to our satisfaction when we start up.

Since its establishment in 1938 near the banks of Oregon's Columbia River, Columbia Sportswear has enjoyed consistent growth. With 2004 sales topping $1bn, the company's outdoor clothing and footwear products have a healthy percentage of the U.S. market and are making rapid headway in Europe. To help manage this expanding and highly seasonal supply chain, Columbia partnered with Manhattan Associates, Atlanta, for a warehouse management solution.

Q: I see that you have been involved with Columbia's expansion in Europe. Tell me a little about that.
Dougherty: Yes, I have been with Columbia for the past eight years and I spent two and a half of those years living in France, helping the project team build the distribution center we currently operate there for the European market. When the decision was made to build the DC, a group of six of us went over to create a core staff. We basically hired all the people and helped manage the siting and construction of the building, the implementation of the warehouse management system and the startup. After it was running, we came home.

Q: And what is your current role?
Dougherty: I am director of technical services, specifically in the distribution area, so my responsibilities are to support the corporate process improvements that we are always trying to make in distribution, both domestically and internationally.

Domestically, we have two distribution centers. The largest is here in Portland, where we have something over 800,000 square feet. We serve all of our national accounts out of this DC. The other U.S. facility is in Robards, Ky. That facility supports certain specific products, principally footwear, and, again, that is on a national basis. We are not regionalized; we are divided by product group.

Corporately, we have another DC in Canada and one in Korea and we have a third-party DC in Japan. All of those distribution centers receive containers directly from our suppliers, which are mainly located in Asia, with a few in Central America. In the U.S. we use various West Coast ports and occasionally for the Kentucky facility we use some East Coast ports. For Europe, we primarily use the Ports of Rotterdam, Antwerp and Dunkerque, but we are starting to use some other ports of entry in Europe as well.

Q: What are your key drivers of demand?
Dougherty: Seasonality and promotions certainly are the two key ones. We are a very seasonal business. A lot of our product and certainly our largest revenue quarter is the third quarter, so we are talking there about fall goods. In terms of just the nuts and bolts of distribution, with fall goods we get about half as many units in a case as we do in spring. That impacts the value that we are shipping, but it also impacts the number of boxes we have to handle in the DC, so operations vary dramatically between the different seasons. In one we may be handling more units, but in the other it's more cases. We have to make sure that our processes and our technology solutions are flexible enough to accommodate that.

Q: Was this the primary issue you wanted to address when you went shopping for a warehouse management system?
Dougherty: Seasonality was definitely one of the issues. Another very important one for us was compliance with the consumer products industry, especially in the U.S. and to a lesser degree internationally. We were looking for a best-of-breed product that would allow us to accommodate those different compliance requirements without having to do so much custom coding on the system.

Compliance issues relate to the way goods are labeled and packaged, but also to the issue of EDI file transfers and customer freight routing.

Q: What led you to select Manhattan Associates as your vendor for this project?
Dougherty: Our original selection of Manhattan as a partner occurred in 1997, which was before I joined Columbia in early '98. From what I understand about that process, quite an extensive survey was conducted over several months to look at various providers and also to evaluate producing a warehouse management system internally. Again, the criteria they were looking for was a flexible product that met the compliance requirements we were getting confronted with from our growing customer base. A very extensive list of providers was reviewed on paper and visits were made to client sites for four or five solutions. In the end, Manhattan was chosen for the product it then called PkMS (now Manhattan Warehouse Management System). We still run that product in Portland as well as in France. We stayed with Manhattan when we started up the DC in Kentucky, but there we upgraded to a new version of the product. So we are running a couple of different versions in our DCs.

Q: How has your partnership changed and evolved over time?
Dougherty: I have been involved with these projects since I joined the company in '98. Columbia has had three "go-lives" on a big scale: Portland, France and Kentucky. We also installed PkMS at two facilities in Holland while we were operating there (before opening the DC in France), so we really have had five go-lives.

As a company, we have grown and become a lot better at making these kinds of system changes. We have a very developed team of technicians both on the IS side and the engineering side. We have a group that is responsible for the training and testing of both the warehouse management product itself as well as the interface to the material handling equipment and controls. So we improved a lot between the original project here in Portland and the implementation at Kentucky.

We also notice that Manhattan has improved and grown as a company in the period of time that we have done business with them. These implementations have seemed to get easier over time.

One area where we created a lot of synergy, for example, is in the six or seven critical interfaces that connect back to our corporate enterprise system, which is JD Edwards. As we began to repeat installations at new sites, we found we could reuse these interfaces without having to reinvent the wheel each time.

Another thing we learned over time is not to hesitate in applying resources to the project. I think early on we might have been a little reluctant to do that. But now we realize just how much work and effort is required to properly prepare for making a change of this magnitude.

Q: Can you give us a picture of how you use the system?
Dougherty: I explained earlier that most of our product comes in from Asia or from South and Central America. So it lands at the port and clears customs, then is transported to one of our DCs. At that point, we begin our interface with our host system. From the JD Edwards system, we download purchase orders and we reconcile inventories against those purchase orders as we receive goods into the building. That is the first important check. From that point forward, we create a unique identifier-a barcode label-for each case that we receive. This allows us to process that case through the building, whether we end up shipping it as a full case to the customer or breaking it down into pieces that are picked individually into multiple orders.

A fairly large percentage of goods are shipped as less than a full case, or what we call re-pack. So at the three corporate DCs in Portland, Europe and Kentucky, we have sorting equipment that we use to facilitate taking those individual units and processing multiple customer orders at the same time. Because we have a newer version of the software in Kentucky, we are able there to do pick waves and pack waves, which enables us to process a larger amount of work in one group. Here in Portland and in Europe, for the time being, we are running on an older version, so we still create waves of pick tickets that go out onto the floor, which don't allow us to get the aggregation that we get with the newer process.

A typical order, with normal processing, leaves the building within two days. Exceptions to that are orders with value-added services, where we do some special ticketing or labeling or putting products on hangers. That may take another couple of days to process through. Rush orders always are shipped within 24 hours, but if we get an order early enough in the day we can get it out the same day.

Q: Have you quantified any of the benefits?
Dougherty: I don't have hard numbers but, overall, we certainly have improved our process with use of the warehouse management product and, as we have grown as a user, we have learned to be a bit more sophisticated. We have some pretty good experts now in the building who are learning how to use some of the pieces that we bought in with the later versions-things like the performance management package, the labor management package, the transport execution package. We mostly have monitored things that impact customer service, like order fulfillment and order accuracy and those have improved. We are looking at 99.9-plus percent of accuracy in fulfillment and that is a level that we have been able to maintain, so we are very happy with that. That is partially due to the warehouse management system but it also depends on having good interfaces back to the host.

Q: Are there any lessons learned from this project that you would like to share with our readers?
Dougherty: We have learned that when it comes to new systems and new processes and new software, we need to test more than we might think we should. We believe a lot of testing is what has made these implementations so successful. We test the material handling equipment and the WMS separately. Then, when we are satisfied that both of those are going well, we do an integrated test where we have them work together. We run a lot of product around the building before we even start production just to ensure that we feel confident it is going to work to our satisfaction when we start up.