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The internet has brought a whole new level of complexity to supply-chain management. And logistics service providers aren't immune from its impact.
Two years ago, Europa Worldwide Logistics, with more than half a million square feet of public warehouse space in the United Kingdom, realized it needed to upgrade its software in order to hang on to a key account.
The customer was a wine retailer that was transitioning from old-school distribution channels to an internet model. The idea was to offer product online from vintners worldwide. Customers pay a monthly fee in exchange for discounts on a broad selection of wines. Many of the suppliers are small, relatively obscure entities who rely on the retailer to help fund their operations.
Selection is the selling point. A typical Web order might consist of anywhere from six to 15 individually selected bottles of wine in a case. A single box can require up to 20 picks. Daily volumes on behalf of the retailer approach 11,000 orders, involving up to 600 distinct SKUs.
Europa needed to monitor every one of those individual picks, with full barcoding and scanning capability, while being able to replenish from part-pallet loads. Financial recording and management had to keep pace as well. When it came to the selection of new software functionality, says chief executive officer Russell Keep, "the flexibility of the billing was paramount."
The operation's physical complexity was only the beginning. The wine retailer was being required to pay value-added tax (VAT) on an entire pallet of product before it could sell a single bottle. That would have involved a huge upfront payment that it could ill afford to make.
Following a review of nine software providers, Europa selected a logistics application from Accellos Inc. The vendor prevailed over several rivals with larger systems and broader market coverage, in part because its customer base consists entirely of multi-client, third-party logistics providers like Europa, says Keep.
The First Implementation
The initial rollout of Accellos One Enterprise 3PL took place at two of five Europa warehouses that handle logistics contracts, in Northampton and suburban London. (The company has nine facilities in the U.K. overall, but the rest focus on road distribution, which makes up 60 percent of its business.) According to Joe Couta, senior vice president with Accellos, the task required the vendor to supply just one training consultant and one engineer, the latter of whom worked on integrating physical systems with the new software.
"The first thing we do is educate [the customer] on our product," Couta says. "Then we go through a business-process review. We publish a document to make sure there are no surprises." After that comes employee training. Following a conference-room pilot, the system goes live.
A potential hitch for Europa and the wine retailer was the need to certify the Accellos system with Her Majesty's Revenue & Customs, the U.K. body that assesses and collects taxes and duties. Couta says Accellos and the logistics provider achieved the task in six months - twice as fast as a rival software vendor had claimed it would take.
In the process, the new software solved the wine retailer's duty dilemma. It provided a level of monitoring detail that would allow the company to pay tax on individual bottles as they are sold and shipped. For each item, the system tracks such variables as size, alcohol content, type of wine and tax rate.
The Accellos application lets the user establish and monitor performance standards throughout the processes of receiving, storing, picking, repacking and shipping. At the same time, customers can track the movement and status of inventory while it's in Europa's possession, through Accellos's eVista visibility tool.
Under the current system, incoming bottles are stored randomly in the warehouse. Stocking locations are recorded with the use of handheld devices. The data is then used to identify pallet positions so that workers can move product to an 11,000-square-foot mezzanine for picking and shipment.
Keeping Tabs on Orders
To keep pace with incoming orders, the Accellos software polls the wine retailer's site every seven minutes. Data flows into the system via Microsoft BizTalk middleware. The software groups orders by product type, prints picking slips and labels, and oversees their transfer to conveyors for picking, scanning of slips, sealing and shipping. The boxes might also include marketing materials and promotional items, such as free corkscrews.
At day's end, Europa sends reports to the customer, which uses the information to calculate restocking and reordering levels.
The system has resulted in a big boost in productivity, Europa says. Shipment volume rose from 274,000 orders in 2010 to an estimated 634,000 orders in 2011. Even with a fivefold increase since implementation, Europa can administer the account with a single individual - a staffing reduction of 80 percent.
Europa intends to expand its use of the Accellos software to all five of its logistics warehouses. A third implementation, in Birmingham, is set for this summer. That location will service a second account dealing in alcoholic beverages. Other customers that could benefit from the technology include those in pharmaceuticals, electronics, household products, automotive parts and camera accessories.
"Now that staff has seen it, they want it quickly," says Keep. "It will become our standard product."
Currently, the application runs on servers located in Europa's London office. Keep says the company is open to moving it into the cloud, once it gets the system fully up and running for all logistics customers. "I don't think it will be particularly long before we take Accellos up on that offer."
He expects the software to provide Europa with a strong selling point in its efforts to attract additional online retailers. "With the likes of the internet, and volumes increasing, I feel we're pretty well-placed with the Accellos product," he says. "We're quite happy with the decision."
Europa Worldwide Logistics
Keywords: supply chain, supply chain management, inventory management, inventory control, logistics management, WMS, warehouse management systems, supply chain planning, retail supply chain, logistics services
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