If you're into scrapbooking, costumes, floral displays or any of hundreds of other activities that require paper mache, beads, glitter or similar items, you have probably relied on products that came from a family-owned business called Darice.
The Strongsville, Ohio-based provider of arts and crafts supplies works hard to supply national retail outlets with all the wicker, "foamies", wood crafts, jewelry items and paint brushes their customers could need.
Darice procurement teams source worldwide, and the company has an office in China to expedite and track orders. The sales team offers planograms, product suggestions, promotional ideas and direct import opportunities to assist retailers and manufacturers.
A family-owned business, Darice began in 1954. Today, it is reportedly the largest full-line craft wholesaler and distributor based in the United States. It produces more than 80,000 products. From Strongsville, just outside Cleveland, Darice vends its product line through wholesale channels, though it also owns and operates the Pat Catan's retail chain. Additionally, its e-commerce channel is growing.
"We have a strong focus on family values, customer service and innovative product development to keep our products fresh and unique," said Jim Petkunas, vice president of technology.
However, with the growth of the business, there were challenges with the legacy WMS system keeping pace. The company had to look outside for help.
Management wanted to contain and reduce warehouse management expenses, Petkunas said.
The setting for the supply chain revamp is Darice's warehouse and distribution facilities. They encompass more than 750,000 square feet, a 300,000-square-foot pick module and a 12,000-square-foot showroom. It's there that every day five to 10 trucks roll in with 6,500 cases. Darice processes 3,000 orders that may affect up to 40,000 order lines. It gets a bit complex, especially when done manually.
In 2002, the company implemented an ERP system with a warehouse management capability, but Darice's growth in business over the next five years simply outstripped the capabilities of the bolt-on module.
It cost too much to make system adjustments, Petkunas says, and Darice couldn't react swiftly enough to change customer requirements for volume, labeling, transportation and picking. "We struggled with our company experiencing significant growth and the inability of our legacy system to scale and keep up with the demands of customers. That was a real problem."
Other issues with the system included difficulty extracting information and overall performance. The company was also looking to the future - it wanted to strengthen transportation functionality and make other enhancements, but it felt the ERP-based warehouse management solution couldn't scale to future growth.
"The overall cost of ownership was becoming too much and the efficiencies we needed just weren't possible," said Petkunas.
Turning to an outside consultant, Darice management resolved that any solution it implemented had to support wholesale and retail fulfillment processes, work order functionality, and domestic and import inbound processing.
Twenty companies were evaluated before Darice contracted with Manhattan Associates, electing to use SCALE, an acronym for Supply Chain Architected for Logistics Execution. As a consequence, Darice uses various SCALE components, including Trading Partner Management, according to Trigg Witmer, a Manhattan account executive who worked on the deal. He says SCALE replaces manual reporting processes with real-time performance data.
Labor and Performance Management tools help Darice improve operations and reduce costs. Transportation Execution helps manage logistics activities, including inbound shipments from suppliers and outbound shipments to customers worldwide.
Darice gained the flexibility to manage changes in its fulfillment processes and streamline operations. The company can react more quickly to changes in transportation, documentation or labeling requirements, and other challenges that might occur.
And the technical environment is less expensive to operate, which lowers the total cost of ownership, Petkunas says. "The underlying architecture was more expensive to support. We had to do custom coding in the old system. In the new system, it's all configuration. Skills were getting hard to find. It took hours of development in the old system. Again, in the new system, it's configuration.
"There was a lot of exception processing before, but we're spending less time on that now because they bubble up to the top quicker. From a transportation perspective, the integration of rate shopping and customer-specific route management - that's all configured in now.
"There's a lot of flexibility in the system, and that's important. You start with certain customer requirements, but in a month you may have new ones. So with the way the system is architected, the cost of ownership is lower than that of the competitors."
How much of a saving? "We're probably talking about 40 percent in the cost of running the system."
Darice's experience was hardly unique, Witmer says. Business growth brings not just increased volumes but greater complexities. "They just became more than what their internal system could handle, and you reach a point of diminishing returns. No matter how many more people you throw at it, you won't be able to do it any faster or better than what you're doing. You need to work smarter and not harder, and that was coming into play."
Keywords: Warehouse Management, Order Fulfillment & P.O. Mgmt., Technology, Inventory Planning & Optimization, Transportation & Distribution, Logistics, Jim Petkunas, SCALE, Supply Chain Architected for Logistics Execution, Transportation Execution
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