Sondra McCulley is vice president of operations with American Wholesale Book Co., the nation's third-largest book retailer. She talks about the ways in which the company cut costs, streamlined operations and boosted worker performance at its warehouse.

American Wholesale Book Co. is a wholly owned subsidiary of Books-A-Million, the nation's third-largest book retailer. Its stores are primarily in the Southeast, supported by a Florence, Ala., distribution center which delivers weekly. The company also serves a number of big outside customers, such as Wal-Mart. Two years ago, it installed a new sorter at its returns center. As of today, American Wholesale has seen a full return on that investment, McCulley says. The new machine streamlines operations while avoiding damage to books. "It's everything we need it to be," she says.

With 30 percent of everything it ships to stores coming back to the DC, American Wholesale had a pressing need for automation at the returns center. McCulley says the system allowed for an immediate reduction in headcount. "We were able to get returns from the stores in a much more timely manner," she says, adding that the company can now sort titles by title and category. That allows for faster processing and returns to the vendor, as well as a dramatic reduction in cost per unit.

The Alabama DC covers 350,000 square feet, with a staff of around 600. Each week it receives product for five days and fills orders for four. Around the time it acquired the sorter for its returns center, the company began focusing on such performance metrics as units per hour, cost per unit and inventory turnover - "things we felt were key components of what a really good manager needs to be tracking," McCulley says. After about seven months of operation, the company began color-coding worker performance, using green, yellow and red to indicate the degree of compliance. For managers who were in the red, and for whom bonuses are tied to performance, the result came as "a real eye-opener." They became highly motivated to improve their results, she says.

"For about a year," says McCulley, "we focused on removing obstacles, [along with] wasted time and handling. We found ways to touch the product less. There was a lot of streamlining."

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