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Mutual of Omaha distributes thousands of printed forms and brochures to support the selling efforts of agents and brokers around the country. In recent years it has eliminated much of its stock and moved to a print-on-demand model. To help support and streamline its printing, order fulfillment and shipping operations, the company implemented a warehouse management solution from HighJump Software, a 3M company.
Q: We think of Mutual of Omaha as a services company. What are the key characteristics of its supply chain?
Elliott: Mutual of Omaha is an insurance and financial services company with an array of administrative forms and literature related to those products that we manage and distribute to our agents and brokers.
I started out in the materials management operation when I first joined the company 20 years ago. Today my responsibilities include print, outbound mailing, warehousing, inventory management, all the distribution functions throughout the company with nationwide shipping to our agents and brokers. So it is the entire print-to-mail, print-to-ship operation.
That operation has changed dramatically. Ten years ago we were inventory intensive. Like a lot of companies, we stocked forms and shipped them in bulk. Today, we are a small-parcel shipper. We have no distribution facilities around the country; everything comes out of our home office here in Omaha. Our only warehouse is really part of a manufacturing plant, where we receive orders, process print on demand, package and ship. As a result, we have reduced our inventory 80 percent. We removed racks and converted that space to a mailing and shipping operation that is integrated into the warehouse.
Q: So you also eliminated the problem of obsolescence?
Elliott: We made a huge reduction in obsolescence. Our industry is highly regulated at the federal and state levels, so we often are required to have different versions of each form to comply with state rules. One state might approve one version of a form, while another will require a slightly different one. So when we change a form, that cascades across multiple state versions. Now, when we change a form there is no inventory involved.
Q: When in this process did you implement a warehouse management system?
Elliott: When we were still picking from stock and shipping bulk, we used the warehouse management functions in our PeopleSoft ERP system, along with paperwork, and that worked fine. But as we became more transaction oriented we realized we needed to improve the process with barcodes. Five years ago, we installed HighJump data collection capabilities and introduced barcoding into our work flow. Everything was driven by barcodes, from receipt of the work order, through order processing and on to shipping, where we interfaced with a United Parcel Service shipping system. That was a tremendous improvement, but we remained paper based with batch ERP processes. In October 2005 we implemented HighJump Warehouse Advantage and gained the efficiencies of a warehouse management system.
Q: Since you already had worked with HighJump Software, was it an automatic decision to go with them for the WMS?
Elliott: Yes, we had a good experience and were successful working with HighJump Software on the data collection, so it made sense to build upon that partnership.
Q: I understand that you worked hard to involve your warehouse employees in designing the new system. Tell us about that.
Elliott: Our entire organization is people centered. We really do believe that our most valuable resource is our people and that we get the best results by involving the people who know the job best. We not only engaged our warehouse operators in the process; we selected two warehouse operators to actively participate in the design and implementation of the WMS product. These two operators were intimately involved in the design of the system. They sat down with the IT technical folks and worked with the vendor on the design. Just as important, they went back to the warehouse and explained what we were doing to the other operators and obtained their feedback. If something could not be done as designed, they would explain this and let them know the options and results. They were the liaison, responsible for keeping the people in the warehouse informed. Because of this communication, buy-in came naturally. When we went live and ran into the challenges that always come with significant software and hardware implementations, there was tremendous engagement on the part of the operators. Our people embraced the change because they created it. That level of involvement makes all the difference in the world in the product, the result, the commitment, everything.
Q: What were your primary goals for the implementation?
Elliott: Our project team identified the optimal material flow for the print and warehousing processes. From raw paper through print, receiving, picking, order consolidation, packaging, and shipping; we knew how the materials should flow and we designed conveyors and other material handling equipment for that flow. We needed a WMS software package with strong base functionality for standard warehousing processes with the ability to accommodate and effectively support our new material flow.
We wanted more flexibility so we could easily take orders from different systems, feed the orders into our work flow and still have the ability to send that data through our interfaces with PeopleSoft for billing and budgeting. We needed a WMS system that would allow us to grow and adapt as we move forward with more variable and personalized print solutions. We didn't want to be boxed into dealing with an ERP-based solution that was not going to change much over time.
We needed a system that would improve time-service and accuracy. Our service commitment is to ship orders complete within 72 hours. A fast turnaround is really important because we don't want our agents and brokers around the country to maintain significant inventory. We want them to have a working supply and be confident that when they place an order they will get the material quickly. In May of this year, we printed and shipped 90 percent of orders by the end of the next business day.
Another critical goal for the new system was to leverage our RF technology and eliminate ERP paper-driven batch processes.
Q: Can you give us a walk-through of how it works today?
Elliott: Our typical customer order includes numerous line items; with the majority printed on demand. For efficiencies in print, different items are printed on different printers, requiring a post-print consolidation effort in the warehousing area. Prior to the WMS, we could not complete the consolidation process in an acceptable time frame. Today, print jobs or work orders are received and assigned to a tote by processing the work order and scanning the tote ID. The WMS system, through RF handhelds, instructs the operator to send the tote to shipping for packaging if the order is complete, or assigns the tote to a consolidation area where it is held for additional line items. Operators receive additional print work orders or are prompted to pick stocked items that are queued as a result of the completion of the print work order. When the final item is placed and scanned to the tote, the RF handheld instructs the operator to send the completed order to shipping.
In shipping, a packaging operator scans the tote to generate a customer packing slip. The packaging process includes a quality check to ensure the order is complete. A final scan of the carton at the UPS WorldShip system updates the order to "shipped" in the WMS and processes the shipment in UPS.
When you eliminate the paper and are routing totes and scanning barcodes, the WMS system is powerful. As a result, we can effectively consolidate print work orders, pick and consolidate stocked inventory items, make adjustments to re-allocate inventory, update pick locations, generate accurate packing slips, change an order priority to process a rush order, or complete a variety of other dynamic real-time functions.
Q: Do you also use the system for reporting?
Elliott: Robust reporting was another requirement of the new system. Supervisors view online reports and charts to monitor work activity and will quickly adjust and move staff to an area with increased activity. Warehouse operators view charts and graphs to monitor their workload, watching as new orders enter the system, tracking their own progress and performance. Similarly, it is necessary to monitor order details. We easily review order dates taking action on aging orders and ensure critical rush-priority orders are moving through the process. Our work is now visible at every level throughout the warehousing process.
The WMS has been a win/win for us across the board. Our biggest savings came from eliminating inventory obsolescence with on-demand electronic printing. The problems print-on-demand created in our old paper-based batch processes were eliminated. We significantly improved time-service and quality and are now positioned beautifully for future advances in electronic print.
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