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The world of extreme sports is characterized by risky activity verging on danger and chaos. But that ethos shouldn't be reflected in the industry's supply chain.
Prolimit Ltd. Co. claims to be the largest retailer of extreme sports equipment and apparel in Latin America. With 53 stores throughout Chile, it sells more than 60 major brands, including DC, Rusty, Volcom, Hurley, Etnies, Es and Emerica. Products include snowboards, surfboards and skateboards.
A growing interest in extreme sports throughout Latin America has fueled rapid expansion of the retailer's business. Currently it operates 25 Adrenalin board shops within the stores of Ripley Corp. S.A., one of the largest retailers in Chile and Peru. Another 28 locations are stand-alone storefronts operating under the Inside board shop brand.
Prolimit found itself in need of a Tier 1 warehouse management system that could handle the dramatic growth in sales, in addition to supporting expansion beyond Chile into other Latin American countries. The company's choice of vendor was Atlanta-based LogFire, LLC, a specialist in WMS software for retail and consumer-goods companies. Prolimit was aware of LogFire's successful engagement with Ripley, so knowledge of the region wasn't an issue, says general manager and chief operating officer Gonzago Aluz.
Prolimit acquired Adrenalin, a former competitor, about 10 years ago, Aluz says. But the company had yet to conform the target's stocking procedures with its own. A new system was needed to manage all inventories flowing in and out of its sole distribution center, a 32,300-square-foot facility in Santiago.
Prolimit is a young company, notes Diego Pantoja-Navajas, chief executive officer of LogFire. It was created a little over a year ago to place some 175 brands under one corporate identity. In the process, the company found itself grappling with a mixture of procedures, each of which involved a different way of managing inventory. A single model of shoe, for example, might carry multiple SKUs.
An Essential Element
Aluz says the WMS project was a top priority for Prolimit. Logistics, he says, "is like the water for the tree." An inefficient system at any stage can put a halt to growth, even in an environment of strong sales.
Pantoja-Navajas doesn't minimize the seriousness of the challenge that Prolimit was facing. The Santiago DC, he says, "was a mess. When we got there, inventory was all over the place. They didn't know how old it was." Products had to be separated by their various brands. And the facility's master data record was in dire need of cleaning.
LogFire didn't just plug a new system into the Prolimit DC. First, it conducted an exhaustive review of procedures, with an eye toward reconciling the tangle of products and SKUs. "We were involved in reshaping their entire operation," says Pantoja-Navajas. "We gave them a lot of advice to put together the current structure that they have."
The project began in November 2010. Aluz says LogFire put the company's warehouse procedures in order within three months, with an emphasis on training and change management. The first priority was inventory reconciliation, followed by the master data cleanup. Actual implementation of the WMS, including the deployment of radio-frequency technology, took less than four weeks. By February, the vendor had brought up the system's receiving and shipping modules, just in time for the beginning of Prolimit's peak selling season.
LogFire sells its WMS under the software-as-a-service (SaaS) model. Applications hosted by the vendor off site are gaining popularity throughout the supply chain, but WMS customers have been somewhat slower to accept the idea, possibly because the systems are tied so closely to physical facilities.
Pantoja-Navajas says Prolimit's owner was "excited" about the notion of hosted software, which requires fewer resources for implementation and simplifies the process of updates. The finance department was also supportive. The company's information-technology managers took some convincing, asking questions about the stability and security of the link between the off-site server and the Santiago DC (Ripley had voiced similar concerns, unsure whether local banking laws allowed for the server to be located away from the company's data center, Pantoja-Navajas says.) A visit to LogFire's data center in Atlanta, coupled with Ripley's positive experience in running the software, won over the Prolimit executives.
Lower Cost, Higher Volume
Prolimit is pleased with the results so far, says Aluz. The new WMS has allowed for a 40-percent reduction in costs, even as the company has seen a 263-percent boost in inventories flowing to the stores. For the first time, Prolimit has control over all its stocks, which are classified and handled under a single, coherent system. In addition, product flows much faster than before. Previously, says Aluz, a container arriving at the DC might sit for 15 to 20 days before its contents were delivered to stores. Now the goods are on their way within 48 hours.
Prolimit is now looking to LogFire to help it gain visibility over inventories and orders at the store level. By year's end, it hopes to have in place a system that will reconcile outbound shipments with what's actually received. After that, the vendor will focus on the inbound side, reconciling shipments from Prolimit's suppliers, most of which are based in the U.S. and China.
A push for internet sales is also scheduled for this year. Aluz says the LogFire WMS already carries the capability to manage e-tailing activities, although the company's warehouse isn't yet set up to handle both sales channels.
LogFire is likely to follow Prolimit into other Latin American countries, as part of the retailer's ambitious plans for expansion. The company expects to have three stores in Peru by the end of this year. Additional plans call for openings in Ecuador and Colombia. "LogFire plans to partner with [Prolimit] every step of the way," says Pantoja-Navajas.
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