No one's downplaying the benefit of name recognition, but sometimes a company can get along just fine without a lot of it, thank you very much. While Pepsi, Toyota and Apple may be important signifiers of quality to some, chances are that the name American Pad & Paper means little to most people. Yet most of us have purchased Ampad products at one time or another. If you've ever been involved in the back-to-school buying frenzy, either as a student or as a parent, you know the school supplies Ampad manufactures. If not, chances are good that in the run up to tax filing time in April you know the company's folders and other paper products. At the very least, somewhere you must have the company's premier product-which it says it invented more than a 100 years ago-the legal pad.
From humble beginnings in Holyoke, Mass., in 1888, Ampad has become one of the giants specializing in such paper products. Over the years it has spawned several manufacturing plants and distribution centers in the U.S. and Mexico. It reportedly ships more than 300 million pounds of office products each year. Its 1,600 SKUs reach into homes, offices and schools everywhere in the country. Moreover, the growth took place without the help of any third-party logistics services partner until a few years ago when Ozburn-Hessey Logistics, Brentwood, Tenn., entered the picture. OH Logistics brought with it the solution to Ampad's outdated distribution needs. And there's no little irony in that in doing so, the warehousing system of one of the country's largest paper-products companies went paperless.
When Don Villarosa, Ampad's director of distribution, joined Richardson, Tex.-based Ampad in 2004, it had four manufacturing sites, three domestic and one in Matamoros, Mexico, and four distribution centers stretching from Salt Lake City to Holyoke, Massachusetts.
Ampad's customer base is spread across the United States as well. It handles the big, like Staples, and the very big, like Wal-Mart. Its accounts also include the commercial divisions of the big stationery vendors and distributors.
Its footprint was just too large, complex and costly, Villarosa says.
"What I did was to evaluate where the customer base was and see where I could centralize my DC, or DCs, to service our customers in the most cost-effective manner."
He wanted to shutter the distribution centers on both the east and west coasts. But to do that he would need a larger facility, and cost considerations prohibited building anything to replace his outdated DC layouts. "And that's what prompted me to put out a request for proposal for a 3PL," he says.
"They were spread out all over the country," says Jeff Lanter, Ozburn-Hessey Logistics senior vice president. "They needed to consolidate because they had these inventories spread out in many different locations."
The request carefully delineated Ampad's volume--by month, in pallets, in cases, and by weight and dimension. "I looked for a 3PL to come back and tell me what square footage and what configuration I needed to drive productivity," Villarosa says.
A number of factors argued in favor of OH Logistics, according to Villarosa, including the provider's Synapse warehouse management system. But the multi-tenant, "campus environment" of the Ozburn-Hessey DC in Edwardsville, Ill., was a major sell as well, he says.
"I have a core staff there, yet I'm able to fluctuate up and down in my staffing. I save on operational costs, but I can still meet my customer needs at peak times."
The narrow-aisle facilities that Ampad had operated from were costly, and the truck and forklift process inside those DCs was too time-consuming for the distribution system that Villarosa felt he needed. He says the wide-aisle, picking operation in Edwardsville has improved productivity about 78 percent overall.
"We came up with a design layout that would maximize the utilization of the space in the center," Lanter says. That was a fully racked environment and system to support a RF or paperless system. It wasn't unique, but it was a layout design that maximized space so they could efficiently conduct their business with a tier one warehouse management system."
Villarosa says he knew exactly what he was getting into when took on the job at American Pad, but he welcomed the challenge. At the same time, he didn't go it entirely alone. He worked with a consultant from the Progress Group, Alpharetta, Ga., in evaluating the distribution needs of the company, and in crafting the RFP.
The evaluation process took about two months, he says. "I remember it well," Villarosa recalls. "It was June 1 that we started work on it, and on Aug. 25 I put out an RFP for outsourcing Ampad's distribution network.
"It provided to the parties our pallet and case volumes on a monthly basis, annualized out-we looked at a year-and the various volumes to customers, and the customer requirements."
Of course, the last is extremely important if a manufacturer is to avoid penalties for failing to comply with retailers' exacting shipping requirements. "You know, if servicing Wal-Mart is 40 percent of my total, it's important to know their requirements for picking and shipping. Same with a Staples: What are their requirements for case and pallet quantities moving through our facilities, and out to them?
"We did that for each customer. And we also provided our 1,600 SKUs, and the dimensions and volumes of those SKUs in monthly buckets."
Labeling, packing and shipping errors, and the resultant penalties, have dropped considerably since OH Logistics came on board, Lanter says.
Each of the candidates was given a three-week deadline to speak to Ampad's needs, but OH Logistics also visited an Ampad facility during that time. Villarosa says that gave the provider a better feel for his needs.
The recommendation called for consolidating Ampad's four distribution centers into two centers, one in Edwardsville, Ill., the other in Riverside, California. (As a part of the continuous improvement process mandated by the relationship, the West Coast center has recently been phased out.) For the most part, Edwardsville is the sole distribution site for Ampad. Envelopes, constituting 15 percent of Ampad's volume, are shipped from a small Ampad-owned hub in Morristown, Tenn., according to Lanter.
The 3PL also advised Ampad to reduce its four manufacturing plants by one. It now operates two such sites in the U.S, and one in Mexico.
At 500,000 square feet, Edwardsville is no mean center, and Villarosa says he occupies roughly half of it. His needs, as well as the size of his workforce, bob up and down according to his two peak seasons. Back-to-school days begins around Memorial Day and runs into early September. Tax time runs from Thanksgiving and peaks near the middle of February. Clearly, staff and systems have to be operating optimally then.
Villarosa provides this snapshot of how the Synapse WMS works: "It interfaces with our systems, so it's updating our perpetual inventory every 7 minutes against what's received, what's shipped out of the facility, and the status of any of the finished goods within the facility.
"It has all of the capabilities of a paperless WMS where people work with an order on their scanner. It's the most productive path to pick the order--by the size and density of the carton, and the volume of the cartons that are to be picked. So you have a stable view of shipping.
"It also provides reporting at the item level, the employee level, all the units of measure of our items. It can track productivity of the individuals that are picking. It's a tremendous source of information to collect and evaluate data."
The labor management tool is an integrated part of Synapse, Lanter says, and it's of great value to users. "When a guy is unloading, the system automatically knows what he is working on. So it's tracking how many pallets an hour he is moving, and at end of the day, we can run a report by function, or by the whole account or by individual, to let us know exactly what that gentleman did and how productive he was relative to the engineered standards that were developed up front for the account."
Synapse is integrated with the Ampad ERP system and its accounting functions, Lanter says. "On the back end, we are able to track inventory activity by velocity, by customer, and by other functions. It's not that they didn't have the ability to do that before, but we definitely have upgraded the amount of services that the WMS system could offer. And it's 100 percent paperless."
A year or so into the relationship, Ampad began interfacing with Ozburn-Hessey's G-Log transportation management module. Productivity shot up again, Villarosa says, because proper orders and volumes were more accurately timed to truck arrival.
"We were able to reduce our footprint a bit," he says, "because after a while you learn how long a particular customer takes to pick, and you can time it to where you're not congesting your warehouse dock floors with orders waiting to be picked up. They can be live-loaded onto truckload carriers. So I'm fully integrated both on the warehouse and transportation side of OH Logistics."
Lanter says he believes the linkage between Synapse and G-Log is highly beneficial. "When orders come in to G-Log, it looks for consolidation opportunities, looks for the expected delivery date, and then the system automatically puts all this together and spits out the orders that we need to pick, say, 24 hours in advance, so we get those all ready for the trucks.
"Once that's all routed and ready to go, it automatically goes into the Synapse system to where we can get those orders and wave those out to the floor for picking and staging those orders."
That's a crucial piece of the relationship, of course, but the 3PL also handles claims and contract rate negotiation with carriers. In addition, OH Logistics processes customer credit, returns, and inventory re-stocking. Distributing promotional items to sales representatives is another value-add.
While Villarosa acknowledges that there's nothing particularly unique to the distribution requirements of a paper-products business, Ampad clearly didn't want the implementation to be any more disruptive to customers than necessary. He says clients were eased into the system in three phases.
The process began with the customers whose needs and requirements were the least complex, he says. Each phase-in period lasted approximately two months. The accounts rolled in toward the end were the ones with highly intensive labeling instructions, and which required exacting EDI transmissions and advance shipping notices. The system handled the volume and intensity well. "It was pretty much seamless. To the majority of our customers, they didn't know that we had even moved."
So what are the numbers? Fill rates have increased five to 6 percent, Villarosa says. On-time performance-having product ready for shipment-has climbed approximately 15 percent. "But hands down, the largest gain we've had is in process improvement, which has increased our productivity by close to 78 percent."
Jot this down in your notepad, Villarosa might say: "When you make productivity advancements of that nature, you drive out costs."
Birth of the Legal Pad
One factory's trash is another's fortune, it seems. In 1888, a paper mill employee in Holyoke, Massachusetts is said to have looked at a pile of the plant's paper waste and envisioned turning the so-called "sortings" into marketable products.
Setting up a one-man shop-the beginning of what would become American Pad and Paper Company-Thomas W. Holley reportedly cut the rejected paper to size, inscribed rules and stitched the pages into pads. His imagination and ingenuity gave birth to the prosaic but ubiquitous "legal pad" found in most every business, home and school.
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